You can view the article (the case), “The Man Who Got Honeywell’s Groove Backt”, by linking to the course EReserves Follow the Case Analysis Outline given in your syllabus. This is….
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Contributed capital represents the total investment that has been paid in to the company by its shareholders as a result of the purchase of stock.
Contributed capital represents the total investment that has been paid in to the company by its shareholders as a result of the purchase of stock. Earned capital represents the cumulative net income that has been earned, less the portion of that income that has been paid out to shareholders in the form of dividends. When profit is earned, shareholders have the option of paying out that profit as a dividend or reinvesting the earnings in order to grow the company. In fact, many companies title the Retained Earnings account as Reinvested Earnings. Earned capital, thus, represents an implicit investment by the shareholders in the form of forgone dividends.
