# What are my retained earnings?

Computes ending retained earnings: beginning retained earnings plus net income, minus cash and stock dividends declared.

- Page: https://www.acalculator.org/finance/retained-earnings-calculator
- JSON spec: https://www.acalculator.org/finance/retained-earnings-calculator.json
- Version: 2e3c016ecdf1

## Default answer

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.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| bre | Retained earnings at the start | Retained earnings at the start of the period. Negative for an accumulated deficit. |
| ni | Net income | Profit for the period from the income statement. Negative for a net loss. |
| div | Cash dividends declared | Cash dividends declared to stockholders during the period. |
| sdiv | Stock dividends declared | The amount moved out of retained earnings for stock dividends. Optional. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| end | Retained earnings at the end | Beginning retained earnings + net income − dividends. |
| change | Change in retained earnings | Net income − dividends: what the period added to retained earnings. |
| dividends | Total dividends | Cash dividends + stock dividends. |

## Method

Total dividends = cash dividends + stock dividends. Ending retained earnings = beginning retained earnings + net income − total dividends.

## Assumptions

- 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

1. bre = $24,000.00, ni = $33,000.00, div = $12,500.00, sdiv = $6,500.00 gives end = $38,000.00, change = $14,000.00, 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.
2. bre = $50,000.00, ni = -$20,000.00, div = $5,000.00 gives end = $25,000.00, change = -$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.
3. bre = -$8,000.50, ni = $12,250.75, div = $0.00 gives end = $4,250.25.

## FAQ

### 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.

## Sources

- OpenStax, Principles of Accounting, Volume 1, 14.4 Compare and Contrast Owners’ Equity versus Retained Earnings: the statement of retained earnings (beginning balance plus net income, less dividends declared, equals the ending balance), stock dividends among the dividends, prior period adjustments to the beginning balance, and the Clay Corporation example ($38,000). https://openstax.org/books/principles-financial-accounting/pages/14-4-compare-and-contrast-owners-equity-versus-retained-earnings (retrieved 2026-10-18)
- U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements: shareholders' equity is the owners' investment plus or minus earnings or losses since inception; distributed earnings are dividends. https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements (retrieved 2026-10-18)