Balance Sheet Definition & Examples Assets = Liabilities + Equity

Alternatively, the company paying large dividends that exceed the other figures can also lead to the retained earnings going negative. A positive retained earnings balance demonstrates that the company is retaining a portion of its income for reinvestment in the business. This can indicate healthy financial management and a commitment to growth. However, retained earnings should be analyzed in conjunction with other financial metrics to get a complete picture of the company’s financial performance. High…