Retained earnings are the profits a company keeps after paying dividends to shareholders. Learn how to calculate retained earnings , see examples, and understand their relevance and uses for investors and businesses. Retained earnings are accumulated profits that companies reinvest instead of paying as dividends , helping finance growth, improve stability, and reduce debt, though decisions may impact shareholder satisfaction and financial ratios like ROE and payout ratios. Retained earnings are the profits left over for a business after paying dividends to shareholders. Learn how to calculate retained earnings , what they can tell you about a company's financial health, and how management can use them. The statement of retained earnings is a key financial report showing how much profit a company reinvests. This guide explains the purpose of the retained earnings statement, its formula (Beginning RE + Net Income – Dividends), and how to prepare one with clear examples and analysis.
