How to Calculate Dividends From a Balance Sheet

by D. Laverne O'Neal

When you are considering investing in a corporation, reviewing the financials is a requirement for conducting your due diligence. You want to assess a company's stability, understand its debt-to-assets ratio and determine the availability of cash, among other factors. Any potential shareholder also wants to know whether the company regularly pays dividends and if so, in what amount. Shareholder dividends are routinely reported in a company's annual report. But if you do not have access to that document, you can calculate the dividend amount using balance sheet and income statement data.

Find the entry labeled "Retained Earnings" on the balance sheet from the current and previous fiscal year.

Look for the year-end net earnings on the current year's balance sheet.

Add the net earnings of the current year to the previous year's retained earnings. For example, if the net earnings are $500,000 and last year's retained earnings were $1 million, the calculation would be $1.5 million.

Deduct the current year's retained earnings from the result. If the current year's retained earnings are $1.25 million, the calculation is $1.5 million minus $1.25 million equals $250,000 in dividends paid.

Items you will need

  • Balance sheets from last year and current year
  • Income statement for current year
  • Calculator

About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

Photo Credits

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