SPONSORED

Retention Ratio Calculator

LAST UPDATE: September 25th, 2020

Calculator

Definition – 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 – How to calculate the Retention Ratio

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.

Sources and more resources