The correct answer is: D. the cumulative earnings of the company after dividends.
Retained earnings are the cumulative earnings of a company after dividends have been paid. They are a measure of the company’s profitability and are used to calculate a number of financial ratios, such as the return on equity. Retained earnings are also an important source of funding for future growth.
Option A is incorrect because retained earnings are not an indication of a company’s liquidity. Liquidity is a measure of a company’s ability to meet its short-term obligations. Retained earnings are a measure of a company’s profitability.
Option B is incorrect because retained earnings are not the same as cash in the bank. Cash in the bank is a measure of a company’s current assets. Retained earnings are a measure of a company’s profitability.
Option C is incorrect because retained earnings are important when determining dividends. Dividends are paid out of a company’s retained earnings.
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