The retained profit, also known as retained earnings, is calculated using the following formula:Retained Earnings = Beginning Retained Earnings + Net Income - Dividends PaidHere’s a step-by-step guide to using this formula:Step 1: Find the Beginning Retained EarningsThis is the retained earnings amount from the end of the previous financial period. You can find this figure on the balance sheet under the equity section.Step 2: Add Net IncomeNet Income is the profit your company made during the current period after all expenses have been deducted from revenues. This figure is found on the income statement.Step 3: Subtract Dividends PaidThis includes all dividends paid out to shareholders during the period. This could be in the form of cash dividends or stock dividends.Step 4: Calculate Current Retained EarningsUsing the formula, add your net income to the beginning retained earnings, then subtract any dividends paid out. The result is your current retained earnings.