The amount of profit a business keeps after paying all of its direct and indirect expenses, income taxes, and dividends to shareholders is known as retained profits. This is the percentage of the company's equity that may be utilised, for example, to fund the purchase of new machinery, research and development, and marketing.
The total profits left over after a corporation pays dividends to its shareholders are known as retained earnings. These funds might be put back into the company by, say, buying new machinery or paying off debt. Because retained earnings are a sort of equity, they are shown on the balance sheet under shareholders' equity.
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