Retained Earnings Calculator

Roll forward your retained earnings balance using RE = Beginning Retained Earnings + Net Income − Dividends Paid. Enter your prior balance, net income (or loss) for the period, and dividends distributed to see the ending balance, net change, and retention ratio.

Quick Facts

Formula
RE(end) = RE(begin) + Net Income − Dividends
A net loss is added as a negative number; dividends include both cash and stock dividends declared.
Retention ratio
(Net Income − Dividends) / Net Income
The share of profit kept in the business instead of paid out to shareholders.

Your Results

Calculated
Ending retained earnings
-
Beginning RE + Net income − Dividends
Net change in RE
-
Net income minus total dividends
Total dividends paid
-
Cash dividends + stock dividends
Retention ratio
-
Share of net income retained

Ready

Enter beginning retained earnings, net income, and dividends paid, then press Calculate.

How the Retained Earnings Calculator works

Retained earnings are the cumulative profit a company has kept and reinvested rather than paid out to shareholders as dividends. This calculator applies the standard roll-forward formula used on every statement of retained earnings: start with the prior balance, add the current period's net income (or subtract a net loss), and subtract any dividends declared during the period.

The formula

For a beginning balance RE₀, net income (or loss) NI, and dividends declared D (cash plus stock), the ending balance is:

RE₁ = RE₀ + NI − D

The result becomes next period's beginning retained earnings, which is why the account is called a "roll-forward" — it carries the full history of a company's retained profit on the balance sheet's equity section.

Worked example

Start with $250,000 of beginning retained earnings. The company earns $75,000 of net income and declares $20,000 of cash dividends plus $5,000 of stock dividends ($25,000 total). Ending retained earnings = $250,000 + $75,000 − $25,000 = $300,000. The retention ratio is ($75,000 − $25,000) / $75,000 = 66.7% — the company kept about two-thirds of its profit and distributed the rest.

What moves the ending balance most

  • Net income or loss: a profitable period always raises retained earnings; a net loss lowers it dollar for dollar, the same as a negative net income in the formula.
  • Dividends declared: both cash and stock dividends reduce retained earnings on the date they are declared, not when they are paid out.
  • Accumulated history: because the balance carries forward, a single bad quarter rarely erases years of retained profit — but several consecutive loss periods can push the balance negative (an accumulated deficit).

Retention ratio versus payout ratio

The retention ratio (also called the plowback ratio) shows the share of net income a company keeps: (Net Income − Dividends) / Net Income. Its complement is the payout ratio: Dividends / Net Income. A high retention ratio suggests a company is reinvesting profit into growth, debt reduction, or reserves; a high payout ratio suggests it is prioritizing returning cash to shareholders. Neither ratio is inherently better — the right balance depends on a company's growth opportunities and capital needs. This calculator performs the arithmetic only and is not financial or investment advice.

Frequently Asked Questions

What is the formula for retained earnings?
Ending retained earnings = Beginning retained earnings + Net income (or minus net loss) − Dividends paid. It is a roll-forward: each period's ending balance becomes the next period's beginning balance, and it accumulates on the balance sheet as part of shareholders' equity.
What happens when net income is negative (a net loss)?
A net loss reduces retained earnings the same way a positive net income increases it - it is simply added as a negative number. If losses and dividends together exceed the beginning balance, retained earnings turns negative, which is called an accumulated deficit.
What is the difference between the retention ratio and the payout ratio?
The payout ratio is dividends paid divided by net income - the share of profit distributed to shareholders. The retention ratio is 1 minus the payout ratio (net income minus dividends, divided by net income) - the share of profit kept in the business to fund growth, debt paydown, or reserves.
Where do retained earnings appear in the financial statements?
Retained earnings appear in the equity section of the balance sheet and are detailed in the statement of retained earnings (or statement of stockholders' equity), which shows the beginning balance, net income for the period, dividends declared, and the resulting ending balance.

Related calculators