Undivided profits refer to gains from current and past years that have not been transferred to a surplus account or distributed as dividends to shareholders. Often times, financial gains or budget surpluses are set aside in a separate account designated as a surplus account, are earmarked for distribution as dividends, or assigned to another purpose such as funding a project.

Essentially, undivided profit refers to corporate earnings that have been allowed to accumulate over a period of time as opposed to being disbursed for other purposes.