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Simple English definitions for legal terms
undistributed profit
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A quick definition of undistributed profit:
Undistributed profit is the money a company makes but doesn't give to its shareholders as dividends. Instead, the company keeps this money for future use. It's also called retained earnings or earned surplus. This money can be used for things like investing in new projects or paying off debt.A more thorough explanation:
Undistributed profit refers to the portion of a corporation's earnings that have not been distributed as dividends to shareholders. It is also known as retained earnings.
For example, if a company earns $1 million in a year and decides to distribute $500,000 as dividends to shareholders, the remaining $500,000 is considered undistributed profit or retained earnings.
Undistributed profit can be used by the company for various purposes such as reinvestment in the business, paying off debts, or saving for future projects. It is an important measure of a company's financial health and stability.