What is retained profit?
Definition of retained profit
Retained profit is the amount of a business’s net income that is kept within its accounts, rather than paid out to shareholders. Retained profit is a strong indicator of the long-term financial stability of a business.
Unlike operating profit, retained profit accounts for money taken out of a business as drawings or dividends.
Retained profit brought forward
Retained profit brought forward is the combined retained profit from every accounting period since a business began. For example, if a business is in its third year and had a retained profit of £5,000 in each of the first two years, then its retained profit brought forward would be £10,000.
Retained profit formula
A simple formula for calculating retained profit (RP) is:
Retained profit brought forward + net income - drawings/dividends = RP
Uh-oh, we're missing some cookies 🍪
We respect your cookie choices so we have only set cookies you agreed to on this website.
Normally you'd see some comments here but we need functional cookies to make that happen. Allowing those cookies would make the comments visible.
The choice is yours.