Retained Earnings

Retained earnings equation

Retained earnings are important for business analysis. It's a full overview of all earned net income from the start of business minus the all paid cash dividends.

Calculated as Beginning Retained Earnings + Net Income or Net Loss – Cash Dividends.

The beginning retained earnings are the retained earnings from a previous business year. The Net Income is the total amount left after expenses are subtracted from revenues. And lastly, Cash Dividends are payments to stock owners.