Enter the beginning period retained earnings, cash dividends, and stock dividends into the calculator. The calculator will evaluate and display the retained earnings of your company.
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Retained Earnings Formula
The following is the retained earnings equation used by the calculator above.
RE = BP + Net Income (Profit or Loss) - C - S
- RE: Retained Earnings
- BP: Beginning Period Retained Earnings
- C: Cash Dividends
- S: Stock Dividends
To calculate retained earnings, subtract the cash dividends and stock dividends from net income, then add this result to the beginning period retained earnings.
Retained Earnings Definition
Retained earnings are the total earning of a business including beginning retained earnings and net income minus the cash and stock dividends. It’s one metric used by businesses to understand how successful they are without investments since investments are usually independent of how a business is operating.
Retained Earnings Example
How to calculate retained earnings?
- First, determine the beginning period retained earnings.
Measure the retained earnings in the beginning period.
- Next, determine the cash dividends.
Measure the total cash dividends.
- Next, determine the stock dividends.
Measure the total dividends from stock.
- Next, determine the net income.
Measure the business net income.
- Finally, calculate retained earnings.
Using the formula above, calculate the retained earnings.
A retained earnings is a measure of the total earnings a business retained through net income minus dividends from stock and cash.