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Retention Ratio Calculator

LAST UPDATE: September 1st, 2018

Calculator

What is the Retention Ratio?

The retention ratio shows how much net income is reinvested in the business (as opposed to paid out as dividends to shareholders).

Formula

Retention Ratio = (Net Income – Dividends) / Net Income

Example

A business has net income of $10,000 and dividends of $5,000.

Retention Ratio = ($10,000 – $5,000) / $10,000 = $5,000 / $10,000 = 0.50

Therefore, this business has a retention ratio of 0.50.

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