how to find retained earnings

June 27, 2026

To find retained earnings, you mostly need three numbers and one simple formula.

What are retained earnings?

Retained earnings are the portion of a company’s profit that has been kept in the business instead of being paid out to shareholders as dividends. They appear in the equity section of the balance sheet and accumulate over time from one period to the next.

The core retained earnings formula

The standard formula you’ll see in textbooks, courses, and practice is:

Beginning retained earnings + Net income − Dividends = Ending retained earnings

Where:

Beginning retained earnings : The balance at the start of the period (e.g., January 1 if you’re doing a year). You pull this from last period’s balance sheet.

Net income (or loss) : Profit from the income statement for the period. If it’s a loss, you subtract it instead of adding.

Dividends paid : All dividends (cash and sometimes stock, depending on treatment) declared and paid during the period. These reduce retained earnings.

If no dividends were paid, then ending retained earnings simply equals beginning retained earnings plus net income.

Step‑by‑step: how to find retained earnings

You can think of it as a three‑step mini “story” you tell with the numbers.

1. Find beginning retained earnings

Go to the prior period’s balance sheet.
Look in the equity section for “Retained earnings.” That is the beginning balance for your current period.

If you’re a brand‑new business with no history, beginning retained earnings is usually 0.

2. Pull net income (or loss)

Open the income statement for the period you’re analyzing.
Take the bottom line (Net income / Net loss).
If it’s income, you add it; if it’s a loss, you subtract it.

3. Subtract dividends

Look up total dividends declared/paid during that same period (board minutes, general ledger, or notes often show this).
Subtract that amount from “Beginning retained earnings + Net income.”

What’s left is your ending retained earnings , which goes into the equity section of the current period’s balance sheet.

A quick numeric example

Imagine you’re closing the books for 2025:

Beginning retained earnings (from 12/31/2024 balance sheet): $150,000
Net income in 2025 (from 2025 income statement): $50,000
Dividends paid in 2025: $10,000

Apply the formula:

Beginning retained earnings: 150,000
Plus net income: +50,000
Minus dividends: −10,000

Ending retained earnings = $190,000 That $190,000 becomes the retained earnings figure you show in equity on the 12/31/2025 balance sheet , and then it becomes the “Beginning retained earnings” for 2026.

If you have to “solve for” retained earnings

Sometimes you’re given a partial balance sheet and asked to calculate retained earnings to make the accounting equation balance.

Using the accounting equation

The accounting equation is:

Assets = Liabilities + Equity

If equity is broken out into common stock, additional paid‑in capital, and retained earnings, you can rearrange:

Retained earnings = Assets − Liabilities − (Other equity accounts)

So if you know total assets, total liabilities, and all the other equity components, you can back into retained earnings as the “plug” that makes both sides match. This approach is common in accounting homework and quick balance‑sheet checks.

Using changes between periods

You can also rearrange the main formula to solve for whatever is missing:

If you know beginning and ending retained earnings and net income, you can solve for dividends.

If you know beginning and ending retained earnings and dividends, you can solve for net income.

Example (solve for dividends):

Beginning RE − Ending RE + Net income = Dividends

This is the same formula, just algebraically rearranged.

Where retained earnings shows up (statement view)

Many companies use a statement of retained earnings (sometimes a section within the statement of changes in equity). It usually looks like this, line by line:

Retained earnings, beginning of period
```
 * Net income (or − Net loss)
```
− Dividends
= Retained earnings, end of period

This formalizes the same formula and gives a clear audit trail of how retained earnings changed during the period.

HTML table: key data points

Here’s a simple HTML table you can reuse in a blog or notes:

html

<table>
  <thead>
    <tr>
      <th>Item</th>
      <th>Where to find it</th>
      <th>How it affects retained earnings</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Beginning retained earnings</td>
      <td>Prior period balance sheet, equity section [web:1][web:3][web:9]</td>
      <td>Starting point of calculation; carried forward from previous period [web:1][web:3]</td>
    </tr>
    <tr>
      <td>Net income (or loss)</td>
      <td>Current period income statement, bottom line [web:1][web:3][web:5]</td>
      <td>Add net income, subtract net loss [web:3][web:5]</td>
    </tr>
    <tr>
      <td>Dividends</td>
      <td>Dividend declarations, ledger, or notes [web:1][web:3][web:5]</td>
      <td>Subtract from retained earnings [web:1][web:3][web:5]</td>
    </tr>
    <tr>
      <td>Ending retained earnings</td>
      <td>Current period balance sheet, equity section [web:1][web:3][web:5]</td>
      <td>Result of Beginning RE + Net income − Dividends [web:3][web:5][web:9]</td>
    </tr>
  </tbody>
</table>

SEO bits (for your post)

Focus keyword: how to find retained earnings
Good meta description example:

Learn how to find retained earnings step‑by‑step using the standard accounting formula, with a simple example and tips for calculating it from your balance sheet and income statement.

This keeps your article clear, practical, and aligned with current small‑business and finance‑education content in 2024–2026.

TL;DR:
Use Beginning retained earnings + Net income − Dividends to find retained earnings, pulling beginning balance from the prior balance sheet, net income from the income statement, and dividends from your dividend records.

Information gathered from public forums or data available on the internet and portrayed here.