My company showed retained earnings of $400,000 on its balance sheet last year. This year, the company's earnings per share (EPS) were $3.00 and its dividends paid per share (DPS) were $1.00. The company has 200,000 shares of stock outstanding. Showing the computations what is the level of retained earnings on the company's balance sheet this year?
The retained earnings this year would be the retained earnings of last year plus the retained profit for this year.
The EPS = Net Income/No. of Shares
given that EPS is $3 ...
The solution explains the calculation of the ending retained earnings based on earnings and dividends