Retained earnings on the balance sheet is a company’s total accumulated net income since it was established, minus all of the dividends that have been distributed to shareholders during that period. This figure allows investors and analysts to see how much money the company has generated through its business operations without external financing sources. It also gives insight into the sustainability of the current dividend payout policy. In order to keep their business running smoothly and growing, companies must reinvest some of these profits back into the business. By doing so, they ensure that they can continue to generate profits in the future and thus provide returns to their investors.