Are Retained Earnings an Asset?

Retained earnings are a type of equity and are therefore reported in the shareholders' equity section of the balance sheet. Although retained earnings are not themselves an asset, they can be used to purchase assets such as inventory, equipment, or other investments.

Are retained earnings an asset or liability?

Are retained earnings an asset? Retained earnings are actually reported in the equity section of the balance sheet. Although you can invest retained earnings into assets, they themselves are not assets.

Is retained earnings a total asset?

Retained Earnings / Total Assets simply measures cumulative profitability over time (ie. retained earnings) as a proportion of total assets. If retained earnings constitute a larger (smaller) proportion of total assets, then this indicates that a company is more (less) profitable.