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To: JakeStraw who wrote (61293)	9/6/2018 4:37:21 PM
From: bruwin	Respond to of 78765

In a roundabout way one could look at it like that. Let's say a company starts off with a Total Revenue of $100 mil. There are various Costs/Deductions such as CoS, SG&A, R&D, Interest Expense, Tax, etc... Eventually what's left of Total Revenue ends up on the Bottom Line at, say, $15 mil. That amount would get transferred to "Retained Income" on the Balance Sheet if no dividend was paid. If a dividend is paid which equates to, say, $5 mil. then the leftover amount of $10 mil. goes to Retained Income. I suppose one could also think of it as the $15 mil. first going into Retained Income and then the $5 mil. gets deducted from there. I usually think of it as Dividend amount first deducted and then what's left over goes to the Balance Sheet number. That's why, for me, the Income Statement is the more important of the three financial statements as it's the net Bottom Line that very much "governs" the Balance Sheet, if there's no major change in the issuing of shares, based on the basic equation ... Share Capital + Retained Income = Total Assets - Total Liabilities. What you add to the left must always be reflected on the right ....