Dear XXXXXXXXXX,
Yes.. you are very much correct that the retained earnings account is usually tampered with for all adjustments that one makes.
Banks are all justified in asking for them as the retained earnings figure show the internal cash strength (financial strength) of of the company.
You are primarily on the right track in going after dividends, and Inventory accounts to bring Retained Earnings to their legitimate value.
In addition to this, Kindly also check any extraordinaty items (i.e. any items that is of non recurring nature like accqusition of asset out of internal accruals or acquisition through Cash, any buying out of firm through cash, etc)
Also go after any internal expenditure made out of iternal cash which also affects the retained earnings. Also see, if you have made any major provision or any amortization (as these are non cash expenses but do affect the retained earnings).
I hope the above additional measures should help....
Warm Regards,
Financial Advisor
Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting