Are Retained Earnings a Liability Account?

Investors and managers use both retained earnings and cash flow data to make strategic decisions. For example, a company with high retained earnings but weak cash flow may need to improve working capital management. On the other hand, a company with strong cash flow and growing retained earnings is often seen as financially healthy and capable of funding future investments. Are Retained Earnings Current Liabilities or Assets? Retained earnings often cause confusion for those new…