Profits kept in the business. The Retained Earnings Calculator takes retained earnings at the start of the period, net income for the period, dividends paid and returns retained earnings at the end plus dividend payout ratio, added to reserves this period. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Retained Earnings Calculator works
Retained earnings are the cumulative profits kept in the business rather than paid out. They fund growth without borrowing or new equity.
Worked example
With the example values (retained earnings at the start of the period of $200,000, net income for the period of $120,000, dividends paid of $30,000), the retained earnings at the end is $290,000.00; dividend payout ratio 25%, added to reserves this period $90,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is retained earnings at the end calculated?
ending retained earnings = beginning retained earnings + net income − dividends.
Which figures do I need?
Retained earnings at the start of the period, net income for the period, dividends paid. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
