- Retention Ratio:
- What does Retention Ratio mean?
- The retention ratio is also referred to as the plowback ratio. It is the amount of retained earnings relative to earnings. The earnings can be referred to as net income and are found on the income statement.
- Retention Ratio = 1 – (Dividends per share / EPS)
A company declared $0.84 semi-annual cash dividend per share to shareholders of record December, 12, to be paid January, 12. As of the fiscal year ended September 30, 2017, the company's EPS equals $5.73.
According, to the formula, Retention Ratio is:-
- = 1 - ($0.84 / $5.73)
- = 0.8534, or 85.34%
- Jun 10, 2018
- Tool Launched