How to calculate retained earnings

 Retained earnings can be calculated using the following formula:

Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

1. Beginning Retained Earnings: This is the balance of retained earnings at the start of the accounting period, typically the beginning of the fiscal year.

2. Net Income: This is the profit earned by the company during the accounting period. It includes revenues minus expenses and taxes.

3. Dividends: This represents the amount of profits distributed to shareholders as dividends during the accounting period.

To calculate retained earnings, you start with the beginning retained earnings, add the net income, and then subtract any dividends paid out to shareholders during the period. The result is the retained earnings balance at the end of the accounting period.