Undivided Profit

DEFINITION of 'Undivided Profit'

Gains from current and past years that have not been transferred to a surplus account or distributed as dividends to shareholders. Undivided profit refers to corporate earnings that have accumulated over a period of time.

BREAKING DOWN 'Undivided Profit'

Current earnings may be credited to the undivided profits account and will eventually either be distributed to shareholder in the form of dividends or will be held within the company in the form of retained earnings. Dividend distributions signal strong financial strength within the company while retained earnings can be used to further future growth; the desired strategy depends on the amount of profit generated and the potential for value maximizing projects.

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