Accumulated Retained Earnings

Accumulated retained earnings is an important part of the financial report because it shows how much money the company has retained for growth and how much is paid out as dividends to stockholders. When the accumulated retained earnings increase, the company has more value [5].

To obtain the value of the retained earnings, the company starts at the beginning of the year with the previous year's balance. To that figure the net profit after taxes for the year is added. The dividends paid to the preferred and common stockholders are subtracted. The result is the retained earnings at the end of the year.

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