Retained earnings

[damnhardtofind]

How do you calculate these?

I thought it was

Change in retained earnings = Income - Dividends

but that doesnt seem to work always.

 

[Rusty]

How do you calculate these?

I thought it was

Change in retained earnings = Income - Dividends

but that doesnt seem to work always.

Retained Earnings are the profits kept in the company after payment of
dividends. So where are you seeing a discrepancy?

Rusty

 

[damnhardtofind]

Retained Earnings are the profits kept in the company after payment of
dividends. So where are you seeing a discrepancy?

Rusty

For example, Cisco Systems:

2006 2005
Net Income 5,580.0 5,741.0
Gross Dividends - Common Stock 0.0 0.0
Retained Earnings (Accumulated Deficit) -617.0 506.0

 

[Rusty]

For example, Cisco Systems:

2006 2005
Net Income 5,580.0 5,741.0
Gross Dividends - Common Stock 0.0 0.0
Retained Earnings (Accumulated Deficit) -617.0 506.0

You are comparing Net Income for a period with Accumulated Retained
Earnings.

The balance sheet should look like this;

Retained Earnings at beginning
Plus Net Income this period
Minus Dividends Paid
Equals Retained Earnings at end

Does that help?

Rusty

 

[damnhardtofind]

You are comparing Net Income for a period with Accumulated Retained
Earnings.

The balance sheet should look like this;

Retained Earnings at beginning
Plus Net Income this period
Minus Dividends Paid
Equals Retained Earnings at end

Does that help?

Rusty

506.0
+ 5,580.0
- 0.0
= 6086

Why is it not -617.0?

 

[Rusty]

506.0
+ 5,580.0
- 0.0
= 6086

Why is it not -617.0?

My guess is that the informaton is incorrect or incomplete.

Rusty

 

[bakerjm75]

One thing to keep in mind is that sometimes there are prior period
adjustments made. Unless you are looking at the Statement of Retained
Earnings, you're not going to see all reasons of why your figures don't
match.