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Retained earnings to total assets ratio definition

Description

Retained earnings to total assets ratio (RE/TA) shows company’s assets profitability. Data needed to calculate this ratio is collected from the balance sheet.

Norms and limitations

There are no general norms for this ratio.

Decreasing trend of this ratio value may indicate possible problems with company’s profitability. It is recommended to compare this ratio to those of the companies, working within the same industry.

Formula

Retained earnings is a measure, which shows a part of net income that wasn’t paid out to the shareholders as a form of dividends.

Assets (Total assets) - a balance sheet item, representing what a company owns.