💰 Finance calculator

Retained Earnings Calculator

Calculate ending retained earnings from beginning balance, net income, and dividends paid. See the full statement of retained earnings, retention rate, payout ratio, net change badge, and a rolling 3-period projection — all from three inputs.

Enter your accounting inputs

Use a preset or enter your own values. Use a negative number for net income if the period produced a net loss.

🔵 Opening position
📂
Prior period ending balance (can be negative)
🟢 This period
📈
Bottom line from income statement
💸
Cash dividends distributed to shareholders
⚪ Optional — 3-period projection
📅
Assume same dividends rate for projection

Formula

Ending RE = Beginning RE + Net income − Dividends
Retention rate = (Net income − Dividends) ÷ Net income
Payout ratio = Dividends ÷ Net income

RE ≠ cash

Retained earnings is an equity figure on the balance sheet, not a cash balance. A company can have $500K retained earnings and hold very little cash — the funds may be invested in inventory, equipment, or other assets. Never confuse RE with available liquidity.

Tip: use net income, not revenue, as the input. If the period produced a net loss, enter it as a negative number — the formula works identically and will correctly reduce the ending retained earnings balance.
This calculator is for educational and planning purposes only. Actual retained earnings on financial statements may also be affected by prior-period adjustments, stock dividends, treasury stock transactions, restatements, and entity-specific accounting policy. Always verify with your financial statements and accounting records.

Frequently asked questions

What is retained earnings?

Retained earnings is the cumulative portion of net profit that a company has kept inside the business after paying dividends over its lifetime. It appears in shareholders' equity on the balance sheet and represents profit that has been reinvested rather than distributed.

Can retained earnings be negative?

Yes. Negative retained earnings is called an accumulated deficit. It occurs when cumulative net losses and dividend distributions exceed cumulative profits. Common in early-stage companies or after a significant loss period.

Is retained earnings the same as cash?

No. Retained earnings is an accounting entry in the equity section, not a cash account. The accumulated profit may have been invested in assets, inventory, or operations. A company can have high retained earnings and still face cash flow pressure.

What is the retention rate?

The retention rate (also called the plowback ratio) is the percentage of net income kept in the business rather than paid out as dividends: (Net income − Dividends) ÷ Net income × 100. A 75% retention rate means 75% of profits are reinvested and 25% are paid out.

Do all dividends reduce retained earnings?

Cash dividends always reduce retained earnings because they are distributions to shareholders. Stock dividends may also affect retained earnings depending on how they are classified — small stock dividends are typically recorded at market value and reduce retained earnings accordingly.

Related finance calculators

Total Liabilities Calculator Calculate the liabilities side of the accounting equation — pairs with retained earnings to complete the balance sheet. Net Worth Calculator Total assets minus total liabilities — retained earnings is a key component of the equity side. Margin Calculator Analyse net income margin — the primary driver of how quickly retained earnings grow. ARR Calculator Evaluate project returns — compare against the cost of retaining earnings internally vs distributing to shareholders.

Disclaimer

This calculator is for educational and planning purposes only. It does not provide accounting, tax, investment, or legal advice. Actual retained earnings may differ due to prior-period adjustments, accounting policy elections, dividend classification, restatements, and entity-specific reporting rules.