Enter the net income and dividends into the calculator to determine the retention ratio of an asset or business.
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Retention Ratio Formula
The following equation can be used to calculate the retention ratio.
RR = (NI-D)/NI
- Where RR is the retention ratio
- NI is the net income
- D is the dividends
Retention Ratio Definition
A retention ratio is defined as the total ratio of income retained by an investment after dividends are paid out to investors.
Retention Ratio Example
How to calculate a retention ratio?
- First, determine the net income.
Calculate the net income generated by the investment.
- Next, determine the dividends.
Calculate the dividends paid out by the investment.
- Finally, calculate the retention ratio.
Using the equation above, calculate the retention ratio.
FAQ
What is a retention ratio?
A retention ratio is a ratio or measure of how much income is retained after dividends are paid out to investors.
What is a dividend?
A dividend is a regularly occurring payment made to investors of a company.
