Explore commonly used personal finance terms.
An accumulated deficit is a situation where a company’s retained earnings balance is negative, indicating that it has incurred more losses than profits over time. This deficit is recorded in the equity section of the balance sheet and may impact the company’s ability to pay dividends or raise capital. Accumulated deficits are common in startups or high-growth companies investing heavily in expansion. Managing the deficit is essential for long-term financial health, as continued losses can erode shareholder equity and hinder growth.
