Retained Earnings Aren’t a Cash Savings Account
Summary
Hollow Point Trading shares a short explainer on why retained earnings are not a separate pile of cash. A hypothetical company starts with $20 million in retained earnings, earns $5 million, and declares $2 million in dividends, ending at $23 million—without proving its cash balance increased.
https://youtu.be/_yKj_6P0yKE
Retained earnings are not a cash savings account #Shorts
Retained earnings are not a separate pile of cash. Imagine a hypothetical company begins with twenty million dollars of retained earnings, earns five million in net income, and declares two million dividends. Ignoring other adjustments, ending retained earnings are twenty three million dollars. The three million increase does not prove cash rose...
