Which of the following statements best explains why an internal auditor should pay attention to...

Retained earnings represent the cumulative profits reinvested in the organization rather than distributed as dividends. They reflect the organization’s ability to generate resources internally, supporting working capital, expansion, and long-term sustainability.

Option A is incorrect: retained earnings are not the same as dividends.

Option B is incorrect: retained earnings are not equal to excess cash.

Option D is incorrect: rating agencies use broader financial measures, not retained earnings alone.

Thus, the best explanation is Option C: retained earnings show that the organization has been able to generate and reinvest resources from its own operations.