What is the simple formula for figuring Addition to Retained earn.pdf
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Retained earnings represent the portion of a company's net income that is kept for future use instead of being paid out as dividends. The formula to calculate retained earnings is net income minus dividends. An increase in retained earnings occurs when net income rises or dividends decrease.
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What is the simple formula for figuring Addition to Retained earn.pdf
- 1. What is the simple formula for figuring Addition to Retained earnings? What is the simple formula for figuring Addition to Retained earnings? Solution Retained earnings is the amount of money that the company keeps aside for future. The aim of a company is to maximize the wealth of the shareholders. The company provides dividends to the shareholders to maximize their wealth. The retained earnings is calculated by subtracting the dividends feom the net income. The amount of money that is left after the dividends are paid is known as retained earnings. Any addition to retained earnings will be identified by the increase in the value of the net income or decrease in the value of the dividends. The addition of retained earnings will be clear when the dividends are less and net income is more. Retained earnings = net income - dividends