How do you calculate these?
I thought it was
Change in retained earnings = Income - Dividends
but that doesnt seem to work always.
Retained earnings
Dec 20, 2006
6 Replies
Retained Earnings are the profits kept in the company after payment of dividends. So where are you seeing a discrepancy?
Rusty
For example, Cisco Systems:
2006 2005 Net Income 5,580.0 5,741.0 Gross Dividends - Common Stock 0.0 0.0 Retained Earnings (Accumulated Deficit) -617.0 506.0
You are comparing Net Income for a period with Accumulated Retained Earnings.
The balance sheet should look like this;
Retained Earnings at beginning Plus Net Income this period Minus Dividends Paid Equals Retained Earnings at end
Does that help?
Rusty
506.0
- 5,580.0
- 0.0 = 6086
Why is it not -617.0?
My guess is that the informaton is incorrect or incomplete.
Rusty
>One thing to keep in mind is that sometimes there are prior period adjustments made. Unless you are looking at the Statement of Retained Earnings, you're not going to see all reasons of why your figures don't match.
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