Retained Earnings Calculator: Easily Compute Your Company’s Financial Growth
You find ending retained earnings by adding current-period net income to beginning retained earnings and subtracting dividends. For S&P 500 companies, 32 % of earnings are typically paid as dividends (S&P Global, 2023).
Retained Earnings Calculator
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How to use the tool
Beginning Retained Earnings – Type your opening balance, e.g., 50 000 or 600 000.
Net Income / Loss – Enter profit as a positive number or loss as a negative, e.g., 15 000 or -10 000.
Dividends Paid – If dividends were declared, input the total, e.g., 2 000 or 25 000; otherwise leave blank or use 0.
Press Calculate Retained Earnings to view the ending figure instantly.
The formula appears in both IFRS and US GAAP guidance (IAS 1; ASC 505).
Average dividend payout ratio for S&P 500 firms equals 32 % of earnings (S&P Global, 2023).
Negative retained earnings are called an “accumulated deficit” (SEC Form 10-K Glossary).
Private companies often calculate retained earnings quarterly for loan covenants (Wells Fargo Bank Credit Guide, 2022).
What are retained earnings?
Retained earnings are the profits your firm keeps after paying dividends and covering prior losses (Investopedia, 2024).
How do retained earnings differ from revenue?
Revenue records total sales; retained earnings track cumulative profit left in the business after dividends (Kieso et al., Intermediate Accounting IFRS, 2020).
Why subtract dividends?
Dividends reduce funds available for reinvestment; accounting standards require deduction to show resources still at management’s disposal (IAS 1.107).
Can retained earnings be negative?
Yes. Continuous losses or excessive dividends create an accumulated deficit, signalling reduced creditor protection (SEC Staff Accounting Bulletin Topic 6-B).
How often should you calculate retained earnings?
You should update the figure each reporting period—monthly, quarterly, or yearly—to ensure statements reflect current equity (AICPA FRF for SMEs §4.28).
Where is the number shown on financial statements?
Retained earnings appear in the shareholders’ equity section of the balance sheet beneath contributed capital (FASB Concept Statement 6).
How does retained earnings influence dividend policy?
Boards examine retained earnings before declaring dividends; low balances limit payouts to maintain solvency (Harvard Business Review, “Dividend Puzzle,” 2021).
What legal limits exist on paying dividends?
Many U.S. states prohibit dividends that impair stated capital, effectively capping payouts at available retained earnings (Model Business Corporation Act §6.40).
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