Is the retained profit included in the shareholders’ equity? thank you!
Yes, retained earnings (defined as net income minus preferred and common dividends) are included in shareholders’ equity at year end.
So if you look at the equity position you will see the cumulated retained earnings (as defined above) since foundation of the company. Note that retained earnings for the year can get negative if you pay out more in dividends than you have earned.
Other components of equity include contributed capital (preferred and common share - with treasury stock as contra account), cumulated other comprehensive income and unrealized revaluation gains.
Regarding your question I suggest that you look at the basic balance sheet equation for a given year:
Assets = Liabilities + contributed capital + cumulated retained earnings beginning of period + sales - costs -dividends (the last three items are the retained earnings for the period).
Best, Oscar
thank you very much!