Understanding how PlanGuru calculates Retained Earnings
In PlanGuru, retained earnings are automatically projected based on the previous month's balance and the projected net income from the income statement.
When a new scenario is created, the retained earnings account is automatically included, so standard projection methods are not needed. Adjustments and distributions, such as dividend payments, can be forecasted by adding fixed amounts or percentages of net income.
For example, adding revenue and cost of goods sold results in a monthly net income, which increases retained earnings accordingly.
Unlike other software, PlanGuru does not use a separate current year net income account, rolling it directly into retained earnings. Adjustments like dividend payments reduce both retained earnings and cash proportionately.