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Definitions from the Web

Earned Surplus

Definition:

Earned surplus refers to the retained profits or earnings of a company that are reinvested into the business rather than distributed to shareholders as dividends.

Sense 1 - Noun:

In accounting, earned surplus can be found on a company's balance sheet, representing the cumulative profits generated by the company over time.

Sample Sentence: The company's earned surplus has steadily grown over the past five years, reflecting its successful financial performance.

Sense 2 - Noun:

From a legal perspective, earned surplus can be used to determine the financial health and stability of a company, as it indicates the business's ability to generate and retain profits.

Sample Sentence: Investors often analyze a company's earned surplus to assess its long-term financial sustainability before making investment decisions.

Sense 3 - Noun:

In corporate finance, earned surplus can be reinvested in research and development, new projects, or acquisitions, enabling a company to expand and grow its operations.

Sample Sentence: The company decided to allocate a portion of its earned surplus to fund the development of innovative technologies and diversify its product offerings.

Sense 4 - Noun:

A company's earned surplus can also be used to offset potential losses in the future or to sustain the business during periods of economic downturn.

Sample Sentence: Thanks to its substantial earned surplus, the company was able to weather the financial crisis without compromising its operations or laying off employees.

Sense 5 - Noun:

In terms of dividend policy, a company's board of directors may choose to retain a portion of the earned surplus to fund future growth opportunities, while distributing a proportion in the form of dividends to shareholders.

Sample Sentence: The board of directors proposed a dividend payout ratio of 50%, allowing a balance between rewarding shareholders and preserving earned surplus for strategic investments.

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