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GuruFocus has detected 8 Warning Signs with National Grid PLC $NGG.
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National Grid PLC (NYSE:NGG)
Retained Earnings
$27,879 Mil (As of Mar. 2017)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. National Grid PLC's retained earnings for the quarter that ended in Mar. 2017 was $27,879 Mil.

National Grid PLC's quarterly retained earnings declined from Mar. 2016 ($23,226 Mil) to Sep. 2016 ($19,783 Mil) but then increased from Sep. 2016 ($19,783 Mil) to Mar. 2017 ($27,879 Mil).

National Grid PLC's annual retained earnings increased from Mar. 2015 ($22,227 Mil) to Mar. 2016 ($23,226 Mil) and increased from Mar. 2016 ($23,226 Mil) to Mar. 2017 ($27,879 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 local exchange's currency.

National Grid PLC Annual Data

Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16Mar17
Retained Earnings 17,88610,10611,01819,63319,45719,80824,74322,22723,22627,879

National Grid PLC Semi-Annual Data

Sep12Mar13Sep13Mar14Sep14Mar15Sep15Mar16Sep16Mar17
Retained Earnings 19,68419,80822,65224,74324,49822,22723,37723,22619,78327,879
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