How this calculator works
Period earnings retained equal net earnings less dividends. Add that change to opening retained earnings to obtain the closing balance, assuming no prior-period adjustments or other direct entries. Payout modes use positive earnings and can represent dividends above current earnings. Per-share modes divide the period amount by the share count you choose; this is not an EPS accounting calculation.
Formula
Period retained earnings = earnings - dividends = earnings * (1 - payout ratio). Closing balance = opening balance + earnings - dividends. Retained per share = period retained earnings / shares.
Worked example
$100,000 of earnings and $40,000 of dividends leave $60,000 retained, a 40% payout. With 10,000 shares, the period amount is $6 per share. Adding it to an opening balance of $200,000 gives $260,000.
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Frequently asked questions
Are retained earnings cash?
They are an equity account. The funds may already have been invested in inventory, equipment or debt repayment.
What if the company made a loss?
Enter negative earnings in the dividend-amount or balance-sheet modes. A payout percentage is not useful when earnings are zero or negative.
Can dividends exceed profit?
Yes in this arithmetic. A payout above 100% reduces accumulated retained earnings. This tool does not determine whether a dividend is legally distributable.