Earned vs contributed capital (RE/TE)
The share of equity that came from accumulated profit rather than owner contributions.
RE/TE (retained earnings / total equity) shows how much of equity comes from earned (accumulated) profit versus capital paid in by owners. DeAngelo (2006) links a high ratio to a mature firm that self-funds its growth, and a low one to a young firm reliant on outside capital. It reads the life-cycle stage through capital structure.
ExampleRE/TE = 80% means four-fifths of equity is earned rather than contributed — typical of a mature, self-financing company.