What is the formula for calculating the retention ratio?
Asked 5 years ago
What is a good retention ratio and how do I calculate it?
Gareth Browne
Friday, November 12, 2021
Retention rate is calculated by:
Subtracting the dividends distributed during the period from the net income and dividing the difference by the net income for the year.
A good rate is highly variable by industry, there is no set standard for it. A 100% retention rate is good, while a 15% retention rate is generally bad. A good rate is as high as you can get it to go.
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