How to calculate retained earnings ?

Retained earnings are the profits earned by the firm to date minus the dividends or distributions paid to the investors. The statement of earnings is a financial statement prepared by corporations that details changes in the volume of retained earnings over a defined duration. 

The company can calculate the net income and the retained profit by subtracting the RE of the present year from the prior year's earnings.  In general, the ratio used for RE to total assets is taken 1:1 or 100 per cent. 

Such condition is virtually not possible in any business to achieve and if no profits are recorded, no income tax is paid. The statement of earnings keeps RE in a separate account and it can be tax-exempt until it is distributed as salary, bonus or dividends. Salary and bonuses are categorized in the corporate income tax but dividends are not tax-deductible.