Retained earnings refer to the portion of a company’s profits that are not distributed to shareholders. This money is instead reserved for reinvestment in the business, used to fund growth initiatives, dividends and more. Put simply, it’s money that’s kept within the business, rather than sent out to investors or shareholders. It’s important to remember that retained earnings are considered an asset on a company’s balance sheet. As such, they can be leveraged to attract investors or secure loans. Plus, having a solid amount of retained earnings can help a business to weather challenging times with ease, as well as positively contribute to its long-term success.