Is it possible to have positive retained earnings despite having lost money since inception?

Question

I'm looking at the balance sheet for a private company that has lost money every quarter since being founded several years ago. It shows +$228k in retained earnings. Management claims that their accounting software computed this automatically.
This seems like an error to me; if there is no profit, how can there be retained earnings? Am I missing something, or is management?

Satria Digja Pratama · Answer

Positive retained earnings only happen if a firm records cumulative profit.
Whether from its core business (what investor love to see) or from asset sales (what investor doesn't like).
Let say we have company A that sells apparel.
It has buildings and 10 branches, worth 11k each.
Let say company A has zero sales in 10 years.
But it sells each branch every year for 15k each.
in this case, every year company A records 4k as earning and accumulate 40k for 10 years as retained earning.
see?
even without operate, the company could make earning but in the end, still recorded in retained earning.
so, the short answer to your question: NO

Is it possible to have positive retained earnings despite having lost money since inception?

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