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Simple English definitions for legal terms
plow back
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A quick definition of plow back:
Term: PLOW BACK
Definition: When a business makes money, they can either give some of it to the owners or shareholders (called dividends) or they can use that money to make the business better. Plow back means they choose to use the money to make the business better instead of giving it to the owners or shareholders. This can help the business grow and make even more money in the future.
A more thorough explanation:
Definition: Plow back is a verb that means to reinvest the earnings and profits of a business back into the business instead of distributing them as dividends or withdrawals.
Example 1: A small business owner decides to plow back the profits earned in the first year of operation into the business to purchase new equipment and expand the product line.
Example 2: A publicly traded company announces that it will plow back a portion of its earnings to fund research and development for new products.
Both examples illustrate the concept of plow back, where the profits earned by a business are reinvested back into the business instead of being distributed to shareholders or owners. This allows the business to grow and expand, which can lead to increased profits in the future.