Retention Ratio Calculator
The Retention Ratio Calculator is a tool that helps you calculate the percentage of net income that a company retains after paying dividends. This ratio is important for understanding how much profit a company reinvests for growth and other purposes.
Calculate Retention Ratio
What is Retention Ratio?
The Retention Ratio is a financial metric that shows the percentage of net income a company retains after paying dividends. It indicates how much profit is reinvested back into the company for growth and other corporate purposes.
What is Retention Ratio Calculator?
The Retention Ratio Calculator is a tool that helps you calculate the retention ratio based on the company’s net income and dividends paid. This calculation is crucial for investors and analysts to assess how much profit is being reinvested by the company.
How to Use Retention Ratio Calculator?
To use the Retention Ratio Calculator, enter the company’s net income and the total dividends paid. Then, click the “Calculate” button to see the retention ratio, which shows the portion of earnings being reinvested in the company.
What is the Formula of Retention Ratio?
The formula for Retention Ratio is:
Retention Ratio = (Net Income – Dividends) / Net Income
Advantages of Retention Ratio Calculator:
- Helps investors understand how much of a company’s earnings are being reinvested.
- Provides insights into a company’s growth potential and future plans.
- Easy to use and quick for calculating retention ratios for multiple companies.
Disadvantages of Retention Ratio Calculator:
- Does not account for external factors affecting earnings or dividends.
- May not reflect true reinvestment if the company does not reinvest earnings efficiently.
- Only reflects a company’s short-term reinvestment strategy, not long-term sustainability.