Calculating your ending retained earnings is straightforward once you know the Retained Earnings formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Retained Earnings Calculator.
What is Retained Earnings?
The Retained Earnings calculation tells you your ending retained earnings from a few simple inputs. The figure you are solving for here is the ending retained earnings, expressed in INR.
The Retained Earnings formula
The core formula is:
Ending retained earnings = Beginning retained earnings + Net income - Dividends paidHere is what each input means:
- Beginning retained earnings — a money amount. Example: ₹2,00,000.
- Net income — a money amount. Example: ₹1,00,000.
- Dividends paid — a money amount. Example: ₹40,000.
How to calculate it step by step
- Write down the beginning retained earnings (for example, ₹2,00,000).
- Write down the net income (for example, ₹1,00,000).
- Write down the dividends paid (for example, ₹40,000).
- Apply the formula above to get your ending retained earnings.
- Double-check the result with the Retained Earnings Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Beginning retained earnings | ₹2,00,000 |
| Net income | ₹1,00,000 |
| Dividends paid | ₹40,000 |
| Ending retained earnings | ₹2,60,000.00 |
With beginning retained earnings of ₹2,00,000, net income of ₹1,00,000 and dividends paid of ₹40,000, the ending retained earnings works out to ₹2,60,000.00.
Example 2
With beginning retained earnings of ₹4,00,000, net income of ₹1,00,000 and dividends paid of ₹40,000, the ending retained earnings works out to ₹4,60,000.00.
| Result | Value |
|---|---|
| Ending retained earnings | ₹4,60,000.00 |
Example 3
With beginning retained earnings of ₹1,00,000, net income of ₹1,00,000 and dividends paid of ₹40,000, the ending retained earnings works out to ₹1,60,000.00.
| Result | Value |
|---|---|
| Ending retained earnings | ₹1,60,000.00 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Retained Earnings Calculator does it instantly, for free, with the formula and a worked example built in.
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