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    Effect of retained earnings on divisions of a company

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    When the company I work for earns a profit on a project by coming in under budget on expenses or by finishing before the project due date, would that be retained earnings?

    The reason I ask is that sometimes one of our divisions will do better profit wise in the fiscal year than another division. Because of this the divisions that are not doing well still stay afloat, I think that is because the company puts the retained earnings back into the company. Could this be correct?

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    Solution Preview

    The definition of retained earnings is those profits that have retained inside the company over the years, and not distributed to shareholders or owners. Retained earnings can provide the ability and the resources to expand, or in your case, to carry a division that is ...

    Solution Summary

    In a 173 word solution, the retained earnings concept is explored to understand how divisional profits or losses relate to retained earnings.