Retained Earnings
Short definition
Retained earnings are the slice of period profit not paid as dividend and accumulated in equity. They are the source of internal finance; they are not a cash asset, only the balance-sheet trace of accrual profit.
Detailed explanation
If profit is not cash, retained earnings are not a cash buffer. Profit tied in inventory and receivables raises SGR on paper, not in the till.
Dividend policy is the bridge between that stock and cash. Legal reserves and distribution caps are bound by company law and the contract.
Why it matters for the CFO
This line is the first rung of pecking-order. Growth still needs debt or equity if retained profit has no cash counterpart.
How to read it
Retained earnings / assets is internal capital accumulation. Inflation splits historic accumulation from economic capital.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.