Retained earnings: Learn how to find and calculate

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. Beginning Retained Earnings : This is the retained earnings balance from the end of the previous period. Net Income or Loss: This is the profit (or loss) the company made during the current period. 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.