When does Net Factor Income from Abroad (NFIA) shows Negative Value ? State the meaning of retained earning.

Question

Accepted Answer

NFIA shows negative value when:
1. Factor income earned by foreigners in India exceeds factor income earned by Indians abroad
2. More payments are made to foreign factors of production than received from abroad
3. Net outflow of factor incomes occurs

Retained earnings:
Retained earnings refer to the portion of corporate profits that are not distributed as dividends but are retained by the company for reinvestment. They are also called undistributed profits or reserves. Retained earnings are part of the company's savings and are used for future expansion, debt repayment, or other business purposes.