Talk:Retained earnings
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Merge
edit- MERGE - This is called retained earnings/losses for corporations. Octopus-Hands 21:03, 18 October 2006 (UTC)
Miscellaneous comments
editNo!! It should not be merged. Are you stupid> They clearly do not go together! Are retained earnings also called 'reserves' (e.g. in UK)? If so, the article should say so (and there should be a redirect). 217.155.116.125 12:13, 21 February 2006 (UTC)
- They're usually called retained profits in the UK. I added a mention of retained profit to the article. Rhobite 15:52, 21 February 2006 (UTC)
You're right. It's something different. Retained Earnings are part of the "Shareholders' Equity" section in a balance sheet. If this section turns out to be negative it can be labeled "Shareholders' Deficit". Sorry...
Servus, Michael
Disagree. They're too diferent...Davivalle
Debt or Equity
editI got some photocopied pages of a textbook, which says about Retained earnings:
- "Both debt and equity are sources of finance external to the company. Internal sources of finance may be provided from cash generated by the company in excess of the requirements to finance its operations [...]"
Is it me, or this introduction on retained earnings is a bit confusing? Here ar emy thoughts:
- 1) Retained earnings are considered shareholder funds and therefore it is EQUITY. This deffinition talks about equity and debt and then introduces Retained earnings are internal source of capital.
- 2) I do believe that Retained Earnings are in face, INTERNAL source of EQUITY:
- INTERNAL: Since the decision to distribute earnings as dividents or to retain them is done on the management level (and not on shareholders - unless a shareholder is in management but you get the idea, I hope).
- EQUITY: Because it is, indeed, shareholder's money.
Can I suggest that we explain that Retained Earnings is an INTERNAL, LONG TERM, EQUITY source of capital? Of course if I am wrong in any of these, feel free to correct me. --Pinnecco 16:10, 19 August 2007 (UTC)
- The distinction that the textbook fudged by not going into more detail is that there are sources of cash, generated by the company in excess of requirements, which are not retained earnings (see cash flow and related for examples). That said, retained earnings are internal, and indeed are equity (as in the article). I'm not sure what you mean by long term. At any rate, be bold and edit if you think it will add something.--Gregalton 14:16, 21 August 2007 (UTC)
Suggested improvements
editI think this article could be greatly improved by:
- Providing a very simple example (balance sheet and income statement with earnings and dividends, then balance sheet of next year) similar to the one on the Capital surplus page
- Giving some general guidelines on how to interpret a retained earnings value found on a balance sheet (e.g. "If the retained earnings exceeds [some other value on the balance sheet] [multiplied by something else] then we can often infer on the company's [financial health / management style / ...] that ...")