Legal Definitions - plow back

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.