Retained Earnings Guide: Formula & Examples
The retained earnings formula reflects the change in the company’s retained earnings balance over a specific period, such as a fiscal year. Beginning retained earnings are carried forward from the previous period, and then net income is added while dividends paid are subtracted to arrive at the ending retained earnings. Negative retained earnings mean a negative balance of retained earnings as appearing on the balance sheet under stockholder’s equity. A business entity can have a negative retained earnings balance...