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Simple English definitions for legal terms
surplus earnings
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A quick definition of surplus earnings:
Surplus earnings refer to the extra money a company has after paying all its expenses and dividends. It is the profit that remains in the company's account. This money can be used for future investments or to pay off debts. Surplus earnings are important for a company's growth and stability.
A more thorough explanation:
Surplus earnings refer to the excess of corporate assets over liabilities within a given period, usually a year. It is a term used in the context of corporate finance and accounting.
For example, if a company's assets are worth $1 million and its liabilities are worth $500,000, then its surplus earnings for the year would be $500,000.
Surplus earnings are important because they indicate the financial health of a company. A company with high surplus earnings is considered financially stable and may be more attractive to investors.