Retained Earnings
A
REPORT
ON
COMPARATIVE STUDY OF RETAINED EARNINGS
OF
LUPIN v/s WYETH
INTRODUCTION
Managing a company’s operations, marketing and sales activities and expense management are but a few of the decisions that management has to deal with. After it has made a profit the company will then need to decide what to do with those profits. Among the options for using profits are: operations, returning cash to shareholders, or keeping cash in reserve for future use
Retained earnings represent the amount a company has left after it has paid all its expenses, taxes, and dividends. A company can return all the cash it has left after it has taken care of its obligations, but that would handicap its efforts to expand operations, make acquisitions, and replace equipment. Some investors like when this figure is returned to them in the form of dividends, but most do understand that something must be reinvested for the long term.
Companies may retain earnings as a strategic move; they may later spend the reserves on research and development or company acquisitions, to name a few. An example of a company that has a huge hoard of cash is Apple Inc. The company’s cash reserve of more than $40 billion is larger than the entire market capitalization of many Fortune 500 companies.
Why does Apple Inc need so much cash? In the words of Steve Jobs, the company’s CEO, "Our judgment and our instincts tell us to just leave that powder dry right where it is right now and it 's going to come in awfully handy one of these days."
Of course, some investors would like to see the company return some of the money to investors, whether by share buyback, which increases the value of outstanding shares, or in dividends that give investors cash. However, if the company continues to be properly managed, the strategy should bring greater shareholder value in the long term.
Retained earnings are a fuzzy concept; after all you can 't drop them on your foot or use them in any way. And yet
REPORT
ON
COMPARATIVE STUDY OF RETAINED EARNINGS
OF
LUPIN v/s WYETH
INTRODUCTION
Managing a company’s operations, marketing and sales activities and expense management are but a few of the decisions that management has to deal with. After it has made a profit the company will then need to decide what to do with those profits. Among the options for using profits are: operations, returning cash to shareholders, or keeping cash in reserve for future use
Retained earnings represent the amount a company has left after it has paid all its expenses, taxes, and dividends. A company can return all the cash it has left after it has taken care of its obligations, but that would handicap its efforts to expand operations, make acquisitions, and replace equipment. Some investors like when this figure is returned to them in the form of dividends, but most do understand that something must be reinvested for the long term.
Companies may retain earnings as a strategic move; they may later spend the reserves on research and development or company acquisitions, to name a few. An example of a company that has a huge hoard of cash is Apple Inc. The company’s cash reserve of more than $40 billion is larger than the entire market capitalization of many Fortune 500 companies.
Why does Apple Inc need so much cash? In the words of Steve Jobs, the company’s CEO, "Our judgment and our instincts tell us to just leave that powder dry right where it is right now and it 's going to come in awfully handy one of these days."
Of course, some investors would like to see the company return some of the money to investors, whether by share buyback, which increases the value of outstanding shares, or in dividends that give investors cash. However, if the company continues to be properly managed, the strategy should bring greater shareholder value in the long term.
Retained earnings are a fuzzy concept; after all you can 't drop them on your foot or use them in any way. And yet