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Retained earnings represent the amount a company has left after it has paid all its expenses, taxes, and dividends. A company can return all the cash it has left after it has taken care of its obligations, but that would handicap its efforts to expand operations, make acquisitions, and replace equipment.
To arrive at the overall retained earnings, add the current period's retained earnings to the account's balance as of the end of the last accounting period. Let's assume that our company has retained $30,000 in earnings to date. The retained earnings account would now have a balance of $30,000 + $16,268 = $46,268.