Retained Earnings Roll Forward

A Retained Earnings Roll Forward is a financial schedule that details the changes in a company's retained earnings over an accounting period. The calculation begins with the retained earnings balance from the previous period's Balance Sheet. The current period's net income, taken from the Profit and Loss Statement, is added to this beginning balance, and any dividends distributed to shareholders are subtracted.

The resulting figure is the ending retained earnings balance, which is then reported in the shareholders' equity section of the current period's Balance Sheet. This process is a fundamental reconciliation that validates the connection between a company's profitability and its statement of financial position. It serves as an essential control in the financial close process and is a key schedule in any comprehensive financial model.

Beyond net income and dividends, a roll forward may also include other less common adjustments, such as prior period adjustments for error corrections or the cumulative effect of a change in accounting principles. These items are separately disclosed to maintain transparency.