Retained earnings are the cumulative profits a company has kept to reinvest rather than pay out. Negative retained earnings (an accumulated deficit) are common for young, loss-making companies.
How to use the Retained Earnings Calculator
- Beginning retained earnings
- Net income (or loss)
- Cash dividends
- Stock dividends
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter beginning retained earnings, net income and dividends paid.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Beginning retained earnings | Amount in your currency |
| Net income (or loss) | Amount in your currency |
| Cash dividends | Amount in your currency |
| Stock dividends | Amount in your currency |
What each result means
- Ending retained earnings = [Beginning retained earnings] + [Net income (or loss)] – [Cash dividends] – [Stock dividends]
- Retention ratio = ([Net income (or loss)] – [Cash dividends] – [Stock dividends])÷[Net income (or loss)]×100
- Payout ratio = ([Cash dividends] + [Stock dividends])÷[Net income (or loss)]×100
Example values
How the main result changes when Beginning retained earnings changes and everything else stays at the example values above:
| Beginning retained earnings | Ending retained earnings |
|---|---|
| 600,000 | 850,000 |
| 900,000 | 1,150,000 |
| 1,200,000 | 1,450,000 |
| 1,500,000 | 1,750,000 |
| 1,800,000 | 2,050,000 |
| 2,400,000 | 2,650,000 |
Formula
Ending retained earnings = beginning retained earnings + net income − cash dividends − stock dividendsRetention ratio = (net income − dividends) ÷ net incomeWorked example
Inputs — Beginning retained earnings: $1,200,000; Net income (or loss): $350,000; Cash dividends: $100,000; Stock dividends: $0.
Results — Ending retained earnings = $1,450,000.00; Retention ratio = 71.43 %; Payout ratio = 28.57 %.
Frequently asked questions
What are retained earnings?
Accumulated profits kept in the business rather than paid as dividends.
Are retained earnings cash?
No – they're part of equity and may be invested in assets.
Can retained earnings be negative?
Yes – that's an accumulated deficit.
What formula does the Retained Earnings Calculator use?
Ending retained earnings = beginning retained earnings + net income − cash dividends − stock dividends.