What are accumulated earnings?
sometimes referred to as earned excess, accumulated incomes are income or income that the company accepts, but the company investors are not paid as dividends. There are several reasons why the income accumulated is important for the financial stability of many companies. Here are some examples of how accumulated revenues can be asset in business operations. Even more importantly, accumulated earnings illustrate that the company earns a profit that is able to generate dividends for investors. The fact that the company is sufficiently successful to pay dividends to investors is one way to prove a healthy society.
However, instead of paying dividends to investors, undivided earnings in the company are again investing in one of two ways. First, unsuccessful profit may be used to pay any outstaa debt that the company currently owes, such as loans or other obligations. Because the income accumulated is the means,which are not necessary to carry out the usual operating costs of the company, it may decide to use earnings to pay off an outstanding debt can often improve a good situation. Less outstanding debt in the coming years is reflected in an increased profit range.
The second routine use of accumulated earnings is to take money to buy upgraded equipment or otherwise finance a project that will increase the ability of the company to be profitable. For example, earnings can be used to buy new equipment for operations or to finance a marketing campaign for a new product or service. The use of accumulated earnings for investing in the future of society often leads to higher profits for the company over time, which in turn generates more accumulation earnings in the coming years.
When paying dividends is often an important part of the operation of a business, many investors are more than willing to do the daySPUN SMALL DIVIDENSE in the future that he will receive a greater return on the investment in the future. After all, ensuring the financial and operational health of the corporation will mean that the initial investment pays off and will not be lost on the failure of the company. By exploring a new marketing campaign, the chances of implementing more revenue in the investment are allowed to accumulate the accumulated earnings for reducing or eliminating the current debt or as an infusion of cash to finance a new marketing campaign. As every investor understands, increased revenues are always desirable.