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Financial statements
Retained earnings
Cumulative net income the business has kept rather than paid out as dividends. The link from the income statement to equity.
Owned by: AnalystTest band: Analyst
The formula
Ending RE = Beginning RE + Net income − Dividends
In practice
Ending retained earnings = beginning + net income − dividends. If your model's balance sheet is off by exactly net income, this roll-forward is missing.
The kind of thing the test asks
- Opening retained earnings $300k, net income $80k, dividends $20k. Closing retained earnings is…
More in financial statements
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