Who owns the retained earnings of a public firm?
A)Common stockholders
B)Bondholders
C)Management
D)The IRS

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of net income that a company decides to keep rather than distribute to its shareholders as dividends. These earnings are reinvested in the company, often for capital improvements, debt reduction, or to keep on hand for future financial needs. As such, retained earnings are owned by the common stockholders since they represent part of the equity of the company that is not distributed back to the shareholders but instead reinvested on their behalf.

Who Owns the Retained Earnings of a Public Firm