What are 'Unappropriated Retained Earnings'

Unappropriated retained earnings consist of any portion of a company's retained earnings that are not classified as appropriated retained earnings. Appropriated retained earnings are set aside by the board and are assigned to a specific purpose. They will not be distributed to shareholders as dividend payments. Unappropriated retained earnings are not allocated for a specific purpose by the board, such as factory construction or marketing. Unappropriated retained earnings can be passed on to shareholders in the form of dividend payments.

BREAKING DOWN 'Unappropriated Retained Earnings'

Unappropriated retained earnings help to determine the amount of dividend that will be paid to shareholders. They are not directed towards a specific purpose by the board so are available to be paid out as dividends. The greater the unappropriated retained earnings, the higher the dividend that can possibly be paid. Unappropriated retained earnings are divided among all of the outstanding shares of the company and paid as dividends according to a predetermined dividend payment schedule.

Example of Unappropriated Retained Earnings

For example, if Company XYZ has $5,000,000 in retained earnings, not all of that is necessarily going to be available for payment to shareholders in the form of dividends. The board may have projects or other capital expenditures for which a portion of these earnings might be set aside. The portion of retained earnings that is set aside by the board is known as appropriated retained earnings. These funds are assigned to a specific purpose and are not available to be paid out as dividends. However, the portion of the retained earnings that are leftover after the rest of the earnings have been appropriated are known as unappropriated retained earnings. These funds can be used for many purposes, including dividend payments.

  1. Retained Earnings

    Retained earnings is the percentage of net earnings not paid ...
  2. Appropriated Retained Earnings

    Appropriated retained earnings are retained earnings that are ...
  3. Retained Cash Flow - RCP

    Retained cash flow includes remaining cash after expenses and ...
  4. Dividend

    A dividend is a distribution of a portion of a company's earnings, ...
  5. Capital Base

    1. The capital acquired during an IPO, or the additional offerings ...
  6. Stock Dividend

    A dividend payment made in the form of additional shares, rather ...
Related Articles
  1. Investing

    Evaluating Retained Earnings: What Gets Kept Counts

    A company's retained earnings matter. Be investment-savvy and learn how to analyze this often overlooked information.
  2. Investing

    Treasury Shares Wreak Havoc On Retained Earnings

    Aeropostale's retirement of 47.5 million shares in October is worth looking into.
  3. Investing

    How Dividends Affect Stock Prices

    Find out how dividends affect the underlying stock's price, the role of market psychology, and how to predict price changes after dividend declarations.
  4. Financial Advisor

    4 Reasons a Company Might Suspend Its Dividend

    Learn about the four most common reasons a company may choose to suspends its dividends, including financial trouble, funding growth and unexpected expenses.
  5. Investing

    3 Dividend Trends in the S&P 500 Index (TSN, LUV)

    Analyzing recent financial performance of companies demonstrating an inclination to issue consistent dividends to shareholders on a quarterly basis.
  6. Investing

    AAPL: Apple Dividend Analysis

    Apple's dividend has had healthy growth ever since its 2012 reinstatement, thanks to Apple's continuously rising revenue, earnings and operating cash flow.
  7. Investing

    Lessons On Corporate Dividend Payout And Retention Ratio

    Why are dividend payout and retention ratios important to consider when investing in company stock? What companies have high ratios?What constitutes a high dividend payout and retention ratio? ...
  8. Investing

    The Top 5 Dividend Paying Oil Stocks for 2016

    Discover the top five dividend-paying oil companies for 2016 and what factors contribute to their ability to continue dividend payments.
  9. Investing

    How And Why Do Companies Pay Dividends?

    If a company decides to pay dividends, it will choose one of three approaches: residual, stability or hybrid policies. Which a company chooses can determine how profitable its dividend payments ...
  1. How are retained earnings related to a company's income statement?

    Understand what a company's statement of retained earnings represents and how it is related to a company's other financial ... Read Answer >>
  2. Which transactions affect the retained earnings statement?

    Retained earnings are the portion of a company's income that management retains for internal operations instead of paying ... Read Answer >>
  3. What's the difference between retained earnings and revenue?

    See why retained earnings and revenue are both considered important measurements of a company's financial performance, and ... Read Answer >>
  4. How is revenue related to retained earnings?

    Learn what business revenue is and how it relates to retained earnings. See how accountants calculate these key figures and ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center