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Arch Coal Inc (NYSE:ACI)
Retained Earnings
$-1,092 Mil (As of Sep. 2014)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. Arch Coal Inc's retained earnings for the quarter that ended in Sep. 2014 was $-1,092 Mil.

Arch Coal Inc's quarterly retained earnings declined from Mar. 2014 ($-898 Mil) to Jun. 2014 ($-994 Mil) and declined from Jun. 2014 ($-994 Mil) to Sep. 2014 ($-1,092 Mil).

Arch Coal Inc's annual retained earnings declined from Dec. 2011 ($622 Mil) to Dec. 2012 ($-104 Mil) and declined from Dec. 2012 ($-104 Mil) to Dec. 2013 ($-771 Mil).


Definition

Retained Earnings is the accumulated portion of net income that is not distributed to shareholders. Because the net income was not distributed to shareholders, shareholders’ equity is increased by the same amount.

Of course, if a company loses, it is called retained losses, or accumulated losses.


Explanation

Historically profitable companies sometimes have negative retained earnings. This is because they have cumulatively paid out more to shareholders than they reported in profits.

For example, in 2011, Microsoft had negative retained earnings. This does not mean the company lost more money than it made over the years. It just means it paid out more money than it earned.

If a company has negative retained earnings, investors should check the 10-year financial results. They should not assume that negative retained earnings prove a company has generally lost money in the past.

Of course, many companies with negative retained earnings have indeed lost money in the past.

Retained Earnings: Warren Buffett’s Secret.

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.

If the company loses more than it has accumulated, retained earnings is negative.

If a company isn’t adding to its retained earnings, it isn’t growing its net worth.

Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.

Microsoft is negative because it chose to buyback stock and pay dividends.

The more earnings retained, the faster it grows and increases growth rate for future earnings.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Arch Coal Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Retained Earnings -166-16438173479466561622-104-771

Arch Coal Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Retained Earnings 158198-104-180-259-394-771-898-994-1,092
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