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Retained Earnings: Warren Buffett’s Secret

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.If the company loses more than it has accumulated, retained earnings is negative.If a company isn’t adding to its retained earnings, it isn’t growing its net worth.Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.Microsoft is negative because it chose to buyback stock and pay dividends.The more earnings retained, the faster it grows and increases growth rate for future earnings.

Retained Earnings: Warren Buffett’s Secret

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