Unit 8 – Basic Accounting – Discussion Forum. Choose a company of your choice and analyze the company's owner's equity and retained earnings for two years. I chose to analyze the equity and retained earnings of Royal Bank of Canada (RBC), a prominent Canadian financial institution which is a part of the Big Five in Canada, for the fiscal years 2022 and 2023. In 2022, RBC's owner's total equity stood at $108,175M, comprising of common shares of $16, 984M and retained earnings of $78,037M. By 2023, RBC's equity had changed to $117,160M, with common shares at $19,167M and retained earnings at $84,328M. This indicates an increase in RBC’s equity of $8,985M, driven by changes in common stock and retained earnings (Royal Bank of Canada, n.d.). The growth/stability of retained earnings suggests that RBC is managing its finances effectively and is well-positioned for future growth (Royal Bank of Canada Shareholders Equity (Quarterly) Trends | YCharts, n.d.). Explore the influence of retained earnings and owner's equity on the company's capacity to expand and invest in its business. …show more content…
RBC's retained earnings, the portion of its net income not distributed as dividends but reinvested in the business, indicate profitability and provide internal funds for growth initiatives. A healthy level of retained earnings suggests financial stability and reduces the need for external financing. RBC's equity, which includes retained earnings, represents the owners' share in the bank and reflects its financial health. A higher owner's equity implies more resources available for expansion and investment, making RBC more attractive to investors and creditors. Strong retained earnings and owner equity position RBC well to pursue growth opportunities and navigate economic fluctuations (Royal Bank of Canada,