Do You Have a Solid Grasp of Your Retained Earnings?

Let’s start with a defintion of retained earnings, Intuit QuickBooks shares, “retained earnings are defined as the sum of all company profit since business inception, less all earnings payments to owners since inception.”  You need to know your retained earnings because it is a key metric that will help you measure your small business’s long term profitability.  Your retained earnings can be found in your balance sheet.

Your balance sheet shows details of these 3 categories which are components of the balance sheet formula which is Assets – liabilities = equity.:

1. Assets
2. Liabilities
3. Equity

Remember:  “The balance sheet ...