This ratio measures what proportion of total shareholders' equity comes from accumulated retained earnings versus paid-in capital. A high ratio indicates the company has built its equity base primarily through profitable operations rather than by raising capital from investors. A negative ratio means the company has accumulated losses that exceed its paid-in capital.
Retained Earnings to Equity = Retained Earnings / Total Shareholders' Equity
GeminIQ divides Retained Earnings (Accumulated Deficit) by Total Equity, both from the balance sheet as filed.
A: It indicates the company has generated and retained substantial profits over its history, building its equity primarily through earnings rather than capital raises. This is generally a sign of a mature, self-funding business.
A: A negative ratio means the company has an accumulated deficit — cumulative losses exceed cumulative retained earnings. This is common for pre-profit companies and for companies with aggressive buyback programs that push equity negative.
A: Differences stem from how total equity is defined. GeminIQ uses as-filed values for both retained earnings and total equity.