Legal Definitions - undistributed profit

Undistributed profit refers to the portion of a corporation's earnings that have not been distributed as dividends to shareholders. It is also known as retained earnings.

For example, if a company earns $1 million in a year and decides to distribute $500,000 as dividends to shareholders, the remaining $500,000 is considered undistributed profit or retained earnings.

Undistributed profit can be used by the company for various purposes such as reinvestment in the business, paying off debts, or saving for future projects. It is an important measure of a company's financial health and stability.