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    tonie's Avatar
    tonie Posts: 12, Reputation: 1
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    #1

    Apr 9, 2008, 05:24 PM
    Retained Earnings = Earnings less dividends
    Could someone confirm that's the correct definition of R.E. I thought R.E. is net not pay out dividend but my professor has in his note as "Retained Earnings = Earnings less dividends"
    Clough's Avatar
    Clough Posts: 26,677, Reputation: 1649
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    #2

    Apr 10, 2008, 04:23 AM
    According to the following definition from the following site, Smallbusinessdictionary.com - A Small Business Dictionary of Business Planning Terms: Part of the SMBTN™ Network

    Retained Earnings

    Net profits or earnings retained by the company rather than disbursing to the shareholders in the form of dividends. Retained earnings are used to improve the business through development programs, promotion, R&D, etc.
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #3

    Apr 10, 2008, 07:10 PM
    Opening RE + Net Income – Dividends = Closing RE

    Retained Earnings is where all the profit of the company goes. Dividends decrease the equity of a company, so it comes out of RE.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Apr 12, 2008, 06:05 PM
    Quote Originally Posted by tonie
    I thought R.E. is net not pay out dividend
    Are you trying to say the net of what is not paid out in dividends? If so, that's actually correct, except that you're leaving out net of what. i.e. it's the net left over of earnings that was not paid out in dividends, but accumulated over the years. (i.e. not just this year)

    Every definition you've been given is saying the same thing in different ways.
    ndydy75's Avatar
    ndydy75 Posts: 1, Reputation: 1
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    #5

    Nov 26, 2012, 07:07 PM
    If I have only ending retained earnings and dividend figure, can I calculate net income?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #6

    Nov 27, 2012, 05:37 AM
    You should be able to if there are no other issues such as prior year adjustments
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