Statement of Retained Earnings
Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings
The statement of retained earnings is a financial statement that shows the changes in a company’s retained earnings account over a specified period, typically a fiscal year. Retained earnings represent the portion of a company’s net income that is left over after paying dividends to shareholders.
The statement of retained earnings typically includes the beginning balance of retained earnings for the period, any net income or loss generated during the period, dividends paid to shareholders, and any adjustments made to the opening balance of retained earnings. The ending balance of retained earnings is then derived by adding net income or subtracting net loss for the period and dividends paid to the beginning balance of retained earnings.
The statement of retained earnings is an important tool for investors and analysts as it provides insight into a company’s ability to generate profits and pay dividends while also retaining earnings for future growth opportunities. It is typically presented alongside other financial statements such as the income statement, balance sheet, and cash flow statement.
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