What is the term for profit that is retained in the business for future investment?

Retained profit refers to the portion of a company's net profit that is not distributed as dividends to shareholders but is instead reinvested in the business for future growth and development. This can be used for various purposes, such as purchasing new equipment, funding research and development, or expanding operations. Retained profit is crucial for businesses looking to improve their financial health over time, as it allows them to reinvest in their core activities without incurring additional debt or sacrificing shareholder returns in the short term.

Net profit represents the total revenue minus total expenses, including taxes and interest, and is the overall profit a company makes. Gross profit, on the other hand, is calculated by subtracting the cost of goods sold from total sales revenue, and it does not account for other expenses like operating costs. Operating profit is derived from the core operational activities of the business and is calculated by deducting operating expenses from gross profit but before taxes and interest. Each of these terms relates to different aspects of a company's finances, but retained profit specifically signifies the funds reserved for future investment within the business.