Calculate retained earnings balance from beginning balance, net income, and dividends declared with multi-period tracking.
Retained earnings is the cumulative profit a company has kept rather than paid out as dividends, and this tool rolls that balance forward: starting balance plus net income minus dividends declared gives the new balance. Multi-period mode chains each period's ending balance into the next period's beginning, so you can track quarters or years in one run. The surprise most people hit: dividends reduce retained earnings when they are declared, not when the cash is paid, and the result is an equity balance, not money sitting in a bank account.
A concrete input and expected output from the current implementation.
Input
Beginning balance $50,000, net income $120,000, dividends declared $30,000
Expected output
Ending retained earnings: $140,000
50,000 + 120,000 - 30,000 = 140,000. The ending balance is simply the beginning balance plus net income minus dividends declared, which is the roll-forward formula the tool applies to every period.
Every period follows one formula: ending retained earnings equals the beginning balance plus net income minus dividends declared. Net income comes from the period's income statement; dividends declared come from board resolutions. A net loss is entered as a negative income figure, so it subtracts from the balance instead of adding to it.
The tool lets you track several periods in one run. Each period takes a beginning balance, net income, and dividends declared; the ending balance it computes becomes the next period's beginning balance automatically. That chaining shows how this year's profit and dividend decisions accumulate on top of everything the company kept in earlier years.
No. Retained earnings is an equity account: the cumulative net profits a company has kept rather than paid out as dividends. The corresponding cash is typically already spent on assets or operations, which is why a profitable business can report a large retained earnings balance while its bank account is nearly empty.
Yes, and it is not an error. When cumulative losses exceed the profits kept in the business, retained earnings falls below zero, a state accountants call an accumulated deficit. It is common for startups and companies in turnaround, and the calculator will show it as a negative ending balance.
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