alleryStart learning →Profit that a company does not pay out as dividend is called what?
AShare premium
BAccrued interest
CCapital reserve
DRetained earnings
Answer & Solution
Correct answer: D. Retained earnings
Undistributed profit is kept in the business and is known as retained earnings.
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Related questions
Which limits can restrict how much a firm may distribute as dividend?Why might management avoid changing dividend policy abruptly?Which alternative to cash dividends may a firm choose when surplus cash exists?Which type of shareholder usually prefers earnings to be retained?With no NPV-positive projects and surplus cash, what should management do?Management knowing more than the market is called what?If dividends bear higher tax than gains, raising them does what to value?Per the Modigliani-Miller theorem, dividend policy has what effect on firm value?