Accounting
Basic

Retained Earnings

Cumulative profit kept in the business rather than paid out to shareholders.

Formula

RE1=RE0+NI−DividendsRE_1 = RE_0 + NI - Dividends

Variables

RE_1Ending retained earnings
RE_0Beginning balance
NINet income
DividendsPayouts

Example

Start $100k + $70k NI − $20k dividends = $150k

Did You Know?

Retained earnings link the income statement to the balance sheet, carrying profit forward year after year.

retained earningsequitydividends