Retained Earnings Calculator

Calculate Retained Earnings







Formula

The formula to calculate the Retained Earnings (RE) is:

\[ RE = BP + \text{Net Income (Profit or Loss)} - C - S \]

Where:

What are Retained Earnings?

Retained earnings are the total earnings 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, as investments are usually independent of how a business is operating.

Example Calculation

Consider an example where:

Using the formula to calculate the Retained Earnings:

\[ RE = 50000 + 20000 - 5000 - 2000 = 63000 \text{ dollars} \]

This means that the retained earnings for this example are $63,000.