Retained earnings are commonly listed as what on a balance sheet?

Retained earnings represent the cumulative amount of profits that a company has kept in the business rather than distributing as dividends to shareholders. This figure is crucial as it reflects the company's ability to generate earnings and reinvest them into its operations for growth or debt reduction.

On a balance sheet, retained earnings are found under the section that details owners' equity, which indicates the net worth of the business from the perspective of the owners or shareholders. This section not only encompasses retained earnings but also includes invested capital and additional paid-in capital. Understanding the role of retained earnings in owners' equity helps assess the financial health and long-term viability of a business, illustrating how reinvested profits contribute to overall equity. Thus, recognizing retained earnings as a component of owners' equity clarifies their importance in evaluating a company's financial position.