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Balance sheet (deeper)

Retained Earnings

Cumulative profits a company has kept and reinvested rather than paid out as dividends.

Part of the Reading Financial Statements course · Lesson 23 of 33
Formula
Ending Retained Earnings = Beginning Retained Earnings + Net Income − Dividends Declared

What it is

Retained earnings is the running total of a company's net profits since inception, minus all dividends ever paid. It sits in the shareholders' equity section of the balance sheet and represents earnings reinvested in the business. A negative balance is called an accumulated deficit.

Why it matters

Retained earnings show how much a company has self-funded its growth instead of relying on new debt or share issuance. A steadily rising balance signals consistent profitability; a deficit can flag a history of losses or heavy early-stage spending. It is the link between the income statement and the balance sheet.

How it's calculated

Start with the prior period's retained earnings, add net income for the period, and subtract dividends declared.

How Quintarthai uses it

Retained earnings appears in the equity section of the Financials 10-yr tab on a company page, where you can watch it compound or erode over a decade.

Cross-border note. Retained earnings is a standard equity line under both US GAAP and IFRS, so it is directly comparable for Canadian and US companies; the underlying net income may differ because IFRS and GAAP treat some items (such as development costs and revaluations) differently.

FAQ

Are retained earnings the same as cash?
No. Retained earnings is an accounting total of kept profits, not a pile of cash. The money may have been spent on equipment, inventory, acquisitions, or debt repayment, so it can be high even when cash is low.
What does an accumulated deficit mean?
It means cumulative losses and dividends have exceeded cumulative profits, leaving retained earnings negative. It is common for young growth companies still investing ahead of profitability.
Related terms
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