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Retained earnings are a large share of total assets; net income was positive in each of the last 5 fiscal years; shareholders' equity is in the upper part of its industry's equity-to-assets range.
State
Retained earnings a large share of total assets, with 5-year positive-income streak and high equity-to-assets
Emergence
Three readings line up: retained earnings are a large share of total assets, net income was positive in each of the last 5 fiscal years (binary all-years gate), and equity is in the upper part of its industry's equity-to-assets range. The retained-earnings line is the cumulative undistributed-profits residual; the 5-year reading is the mechanism that makes a large retained-earnings line possible.
Limits
Retained earnings on the balance sheet is a residual line — its level is affected by dividend policy, buybacks, restatements, and FX, not only by past earnings. It is an accounting measure of cumulative undistributed profits, not a measure of asset market value. The 5-year positive-income gate is binary; it does not weight magnitude or trajectory. The configuration does not detect unrecognized assets, off-balance-sheet items, undervalued real estate, or any 'hidden' value — the formulas measure only the accounting state.
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Explanation
Three readings co-occur: - Retained Earnings Weight (retained-earnings-weight): retained earnings divided by total assets. A residual line affected by dividend policy, buybacks, restatements, and FX, not only by past earnings. - Profitable All Years 5y (all-years-positive-income-5y): binary gate — fires only if net income was positive in each of the last 5 fiscal years. Does not weight magnitude. - Equity Ratio (ratio-balance-equity): shareholders' equity as a fraction of total assets. The three describe an accounting state shaped by a multi-year profitability history.
Interpretation
Co-occurrence of a high retained-earnings-share reading, a 5-year positive-income gate, and a high equity-to-assets reading. The retained-earnings line is a residual affected by dividend policy, buybacks, restatements, and FX; the formulas do not detect 'hidden' or unrecognized value.
Required Observations
Net Income Positive Every Year (N-Year Window)
Net income was positive in each of the last 5 fiscal years.
Balance Sheet Ratio Compared With the Industry
Shareholders' equity is a larger share of total assets than for most companies in the industry.
Retained Earnings Weight
Retained earnings are a large share of total assets.