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| Retained Earnings to Stockholder's Equity |
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Retained Earnings
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Retained Earnings to Stockholder's Equity =
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Total Stockholder's Equity
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Explanation of Retained Earnings to Stockholder's Equity:
The Retained Earnings to Stockholder's Equity ratio measures how
much Retained Earnings the company is keeping within the company compared to
the total equity.
Importance of Retained Earnings to Stockholder's Equity:
An excessively low, or decreasing Retained Earnings to
Stockholder's Equity ratio is generally negative, possibly indicating the
company is paying out increasingly more earnings to stockholders instead of
reinvesting the money in the company. This ratio will need to be compared
to industry averages, as an excessively high ratio may be negative as well,
meaning the company may be retaining more earnings than it needs.
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