what are retained earnings 
retained earnings are the portion of the net income or profit that the company has set aside to use in the future these are earnings that were not paid out as dividends to shareholders retained earnings indicate how much the company is saving for future expenses such as investing in equipment hiring paying down debt or other necessary spending the bottom lineearnings are the profits from a company usually calculated over a quarter or a fiscal year they are a key element in determining the value of a company s stock if earnings are lower than expected a company s stock price may go down if they are higher than expected the price may go up earnings are a key part of many financial ratios that are used to analyze the financial stability of a company they can also help analysts determine whether a company s stock is over or undervalued because earnings are so important to the value of a company s stock there is always the potential for the numbers to be manipulated 