Find out everything about retained earnings including the formula, features, and factors that affect it. Plus, learn how to calculate it below. Read on! Retained earnings are accumulated profits that companies reinvest instead of paying as dividends , helping finance growth, improve stability, and reduce debt, though decisions may impact shareholder satisfaction and financial ratios like ROE and payout ratios. The statement of retained earnings is a key financial report showing how much profit a company reinvests. This guide explains the purpose of the retained earnings statement, its formula (Beginning RE + Net Income – Dividends), and how to prepare one with clear examples and analysis. Learn how to find and calculate retained earnings , the cumulative profits or net earnings a company has produced over time after accounting for any dividends paid to shareholders. Retained earnings offer insights into a company's financial health and future prospects, and can be used for expansion, investment, debt reduction, or share repurchasing.
