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Finance: What are retained earnings? 26 Views


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Description:

What are retained earnings, and do they give you cankles?

Language:
English Language

Transcript

00:00

Finance allah shmoop what are retained earnings You know when

00:07

you eat really salty food and the next day you

00:10

have cankles it's all that water desperately trying Teo get

00:15

youto wiz out the loads of sodium chloride in your

00:17

body That's retained water well retained earnings and i'll sort

00:22

of work the same way you run a plastic cup

00:24

stamping business with catchy little phrases on the cubs Last

00:28

year you had a million bucks in sales and one

00:31

hundred grand in after tax earnings About eighty grand of

00:35

that earnings was in fact cash Why didn't you retain

00:38

in cash one hundred percent of your earnings What happened

00:42

to the twenty grand in cash there How did evaporate

00:44

Well you had to spend cash out of your earnings

00:47

on a cup plunging machine and then cost real cash

00:51

dough You'll amber ties that cost over time now and

00:54

get essentially a tax break because of it meaning you'll

00:57

show lesson earning so you'll pay less in taxes but

01:00

the cash won't change So this year's hundred grand was

01:03

a nice year but last year you had fifty grand

01:06

in cash profits and you had twenty grand in cash

01:09

Profits the year before then and before then you had

01:12

run it just cash flow break even for the previous

01:14

five years So it all looked like that So in

01:17

total you saved Or rather you retained cash earnings of

01:22

eighty plus fifty plus twenty or a sum total of

01:25

one hundred fifty grand That all now sits in your

01:28

b of a account doing a whole lot of nothing

01:31

of intern two percent a year for the privilege that

01:34

one hundred fifty grand that you have cumulatively retained Like

01:38

ankle's swelling is retained earnings which you will now use

01:42

to print more catchy titles in foreign languages Maybe don't

01:47

look up What those mean All right let's close the 00:01:49.043 --> [endTime] video now

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