The retained earnings figure represents

Question

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Retained earnings represent the accumulation of a company's profits that have been reinvested in the business rather than paid out as dividends. Therefore, retained earnings reflect the portion of a company's assets that were financed from past earnings. It is not a pool of cash readily available to the firm and its stockholders, nor is it a permanent part of the company's equity base. It is not a deferred liability owed to preferred stockholders.

The Retained Earnings Figure Represents