Balance sheet - liabilities and equity
Retained Earnings
Records accumulated profits not distributed to shareholders on the balance sheet. A liability indicates a probable future outflow of resources or an obligation to deliver goods/services; its risk depends on maturity, cost, payment priority and refinancing capa
Retained Earnings
retainedEarnings · Balance sheet - liabilities and equity
- Definition
- Records accumulated profits not distributed to shareholders on the balance sheet. A liability indicates a probable future outflow of resources or an obligation to deliver goods/services; its risk depends on maturity, cost, payment priority and refinancing capacity.
- Calculation
- Accumulated profits - declared dividends - accumulated losses.
- Uses
- Useful for measuring spontaneous financing, future obligations and liquidity risk. Critical in levered companies, utilities, real estate, industrials and advance-payment models. It can mislead without maturities, debt cost, covenants, leases and off-balance-sheet obligations. Cross-check cash, FCF, interest coverage and net debt.
