Because a newly established company has to first stabilise its profits. Only after covering it's initial cost does it start making profits which it can use as retained earnings.
retained earnings are earnings which are made by the business itself by making profit in the business and that is used as internal earning or retained earning. So in order to get retained earnings the business must run properly.
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Dhruv answered this
because newly established company cannot earn sufficient amount of profit.
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Ayushman Khurana answered this
retained earnings are earnings which are made by the business itself by making profit in the business and that is used as internal earning or retained earning. So in order to get retained earnings the business must run properly.because newly established company cannot earn sufficient amount of profit. Only after covering it's initial cost does it start making profits which it can use as retained earnings.