Retained earnings add to shareholder equity (how much each share of a stock is worth in real terms—not market value), which can, in turn, drive stock price up. For this reason, high retained ...

The retention ratio measures the percentage of a company’s earnings that are reinvested rather than distributed as dividends.

Here is the formula for calculating dividends: Annual net income minus net change in retained earnings = dividends paid. Image source: Getty Images. Second, the income statement in the annual ...