What impact does an increase in revenue have on retained earnings?
What impact does an increase in revenue have on
Revenue, almost referred to as gross sales and it affects retained earnings since any increases in revenue through sales and investments boost profits and net income. As a result higher net income higher the money is allocated to retained earnings after any money spent on debt reduction, business investment, or dividends.
Net income will also have a direct impact on retained earnings. As a result, any of factors that affect net income, due to which an increase or a decrease, will also ultimately affect retained earning.
Factors that can mostly affect revenue/sales
- COGS
- Depreciation
- Operating Expenses
So we can say that there is also direct relationship between revenue of the company and retained earnings let's say for example
Step by step
Solved in 2 steps with 1 images
