Intel Reports First-Quarter 2024 Financial Results :: Intel Corporation INTC

is retained earnings a liabilities

This is the case where the company has incurred more net losses than profits to date or has paid out more dividends than what it had in the retained earnings account. Beginning Period Retained Earnings is the balance in the retained earnings account as at the beginning of an accounting period. That is the closing balance of the retained earnings account as in the previous accounting period. For instance, if you prepare a yearly balance sheet, the current year’s opening balance of retained earnings would be the previous year’s closing balance of the retained earnings account. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.

Say, if the company had a total of 100,000 outstanding shares prior to the stock dividend, it now has 110,000 (100,000 + 0.10×100,000) outstanding shares. So, if you as an investor had a 0.2% (200/100,000) stake in the company prior to the stock dividend, you still own a 0.2% stake (220/110,000). Thus, if the company had a market value of $2 million before the stock dividend declaration, it’s market value still is $2 million after the stock dividend is declared.

Additional Resources

In accounting, liabilities are obligations from past events that result in outflows of economic benefits. Similarly, any of these obligations that companies must repay within 12 months are current liabilities. For instance, a company may declare a $1 cash dividend on all its 100,000 outstanding shares. Accordingly, the cash dividend declared by the company would be $ 100,000. Likewise, both the management as well as the stockholders would want to utilize surplus net income towards the payment of high-interest debt over dividend payout.

This is because it is confident that if such surplus income is reinvested in the business, it can create more value for the stockholders by generating higher returns. Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. Amortization of acquisition-related is retained earnings a liabilities intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our US GAAP financial statements.

Where Is Retained Earnings on a Balance Sheet?

Investors pay close attention to retained earnings since the account shows how much money is available for reinvestment back in the company and how much is available to pay dividends to shareholders. In human terms, retained earnings are the portion of profits set aside to be reinvested in your business. In more practical terms, retained earnings are the profits your company has earned to date, less any dividends or other distributions paid to investors. Even if you don’t have any investors, it’s a valuable tool for understanding your business. That said, retained earnings can be used to purchase assets such as equipment and inventory.

is retained earnings a liabilities

Accordingly, companies with high retained earnings are in a strong position to offer increased dividend payments to shareholders and buy new assets. Dividend payments can vary widely, depending on the company and the firm’s industry. Established businesses that generate consistent earnings make larger dividend payouts, on average, because they have larger retained earnings balances in place.


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