What are my retained earnings?
Enter retained earnings at the start of the period, the net income (or loss), and the cash and stock dividends declared. You get retained earnings at the end of the period.
- Retained earnings at the end
- $38,000.00
Starting from $24,000.00, net income of $33,000.00 less $19,000.00 of dividends leaves retained earnings of $38,000.00.
- Change in retained earnings
- $14,000.00
- Total dividends
- $19,000.00
Retained earnings at the end: $38,000.00. Starting from $24,000.00, net income of $33,000.00 less $19,000.00 of dividends leaves retained earnings of $38,000.00.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes ending retained earnings: beginning retained earnings plus net income, minus cash and stock dividends declared.
Example with the default inputs (Retained earnings at the start $24,000.00, Net income $33,000.00, Cash dividends declared $12,500.00, Stock dividends declared $6,500.00): Starting from $24,000.00, net income of $33,000.00 less $19,000.00 of dividends leaves retained earnings of $38,000.00.
Method: Total dividends = cash dividends + stock dividends. Ending retained earnings = beginning retained earnings + net income − total dividends.
- No prior period adjustments; if there is one, add it to the beginning balance first.
- Arithmetic is exact on the typed decimals; money shows to the cent, halves up.
Worked examples
Each example is checked against the calculator on every build.
- Retained earnings at the start $24,000.00, Net income $33,000.00, Cash dividends declared $12,500.00, Stock dividends declared $6,500.00 gives Retained earnings at the end $38,000.00, Change in retained earnings $14,000.00, Total dividends $19,000.00.Source: OpenStax, Principles of Accounting, Volume 1, 14.4 Compare and Contrast Owners’ Equity versus Retained Earnings (statement of retained earnings: beginning balance + net income − dividends declared = ending balance; Clay Corporation). https://openstax.org/books/principles-financial-accounting/pages/14-4-compare-and-contrast-owners-equity-versus-retained-earnings: 24,000 + 33,000 − (12,500 + 6,500) = 38,000
- Retained earnings at the start $50,000.00, Net income -$20,000.00, Cash dividends declared $5,000.00 gives Retained earnings at the end $25,000.00, Change in retained earnings -$25,000.00.Source: OpenStax, Principles of Accounting, Volume 1, 14.4 Compare and Contrast Owners’ Equity versus Retained Earnings (statement of retained earnings: beginning balance + net income − dividends declared = ending balance; Clay Corporation). https://openstax.org/books/principles-financial-accounting/pages/14-4-compare-and-contrast-owners-equity-versus-retained-earnings
- Retained earnings at the start -$8,000.50, Net income $12,250.75, Cash dividends declared $0.00 gives Retained earnings at the end $4,250.25.
How it works
- Total dividends = cash dividends + stock dividends
- Change in retained earnings = net income − total dividends
- Retained earnings at the end = retained earnings at the start + net income − total dividends
Rules:
- The starting balance and net income may be negative (an accumulated deficit, a net loss). Dividends are $0 or more. An empty stock dividend box counts as $0.
- Each amount is at most $1 quadrillion in size.
- The arithmetic is exact on the decimals you type. Money shows to the cent, with halves rounded up (away from 0).
Assumptions
- No prior period adjustment. If there is one, adjust the starting balance by it (after tax) before you enter it.
- All amounts cover the same period.
Worked examples by hand
Clay Corporation, 2020. Start $24,000, net income $33,000, cash dividends $12,500, stock dividends $6,500. Total dividends = $19,000. End = 24,000 + 33,000 − 19,000 = $38,000. The change is 33,000 − 19,000 = $14,000.
A net loss. Start $50,000, net loss −$20,000, cash dividends $5,000. End = 50,000 − 20,000 − 5,000 = $25,000. The change is −$25,000.
An accumulated deficit turned around. Start −$8,000.50, net income $12,250.75, no dividends. End = −8,000.50 + 12,250.75 = $4,250.25.
Other questions people ask
What are retained earnings?
Retained earnings are the profits a company has kept since it started, after paying dividends. They are part of stockholders' equity on the balance sheet. Net income adds to them; net losses and dividends take away from them.
How do I calculate retained earnings?
Start with retained earnings at the beginning of the period, add net income (or subtract a net loss), and subtract dividends declared. Clay Corporation began 2020 with $24,000, earned $33,000 and declared $19,000 of dividends, so it ended with $38,000.
Do stock dividends reduce retained earnings?
Yes. A stock dividend moves an amount from retained earnings into the stock accounts, even though no cash leaves the company. Clay Corporation's $6,500 stock dividend counts with its $12,500 of cash dividends.
Can retained earnings be negative?
Yes. If losses and dividends over the years add up to more than the profits, retained earnings fall below $0. This is called an accumulated deficit. Type it as a negative starting amount.
What is a prior period adjustment?
It corrects an error in an earlier year's net income, after tax. It changes the beginning retained earnings, not this year's income. Add or subtract it from the starting amount before you enter it.
Are retained earnings the same as cash?
No. Retained earnings are a running total in equity. The profits behind them may have been spent on equipment, stock or paying down debt, so a company can have large retained earnings and little cash.