Definition of the word plough back

The term "plough back" is a business term that describes the process of reinvesting profits back into the company rather than paying them out as dividends to shareholders. The word "plough" refers to the action of a farmer ploughing back or turning under crop residue into the soil, to enrich and replenish the soil for future crops. In a similar way, when a company ploughs back its profits, it reinves them into the business to increase productivity, improve facilities, develop new products, or expand into new markets. This helps the company to strengthen its position and grow over time, potentially generating higher returns for shareholders in the long run. In summary, the term "plough back" is a metaphorical expression borrowed from agriculture, used to describe a financial strategy that benefits businesses by reinvesting profits into their operations.