Retention (Plowback) Ratio Calculator

Determine the percentage of net income that a company keeps to reinvest in its core business rather than paying out as dividends.

Income Allocation

Net Income

Total Dividends Paid

Formula: Retention Ratio = (Net Income - Dividends) / Net Income

Retention Analysis

Retention Ratio70.0%Portion Reinvested

Dividend Payout Ratio30.0%

Net Income Distribution

Overview

Determine the percentage of net income that a company keeps to reinvest in its core business rather than paying out as dividends.

💡

Pro Tips

What is the Retention Ratio?: The retention ratio (or plowback ratio) is the portion of net income that is retained by a company rather than distributed as dividends. It reflects the company's growth strategy.
Retention vs. Payout Ratio?: They are mirror images. If the payout ratio is 30% (30% of profits paid as dividends), the retention ratio is 70%. Together they always equal 100%.
What is a 'good' Retention Ratio?: High-growth companies (like startups) usually have a 100% retention ratio. Mature companies with fewer reinvestment opportunities (like utilities) often have lower retention and high payouts.

Fun Facts

"The retention ratio is a primary component of the 'Sustainable Growth Rate' (SGR) formula."
"Warren Buffett's Berkshire Hathaway has historically had a 100% retention ratio, never paying a dividend."
"A high retention ratio only creates value if the company can reinvest those funds at a rate higher than its cost of capital."

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Retention (Plowback) Ratio Calculator

Determine the percentage of net income that a company keeps to reinvest in its core business rather than paying out as dividends.

Income Allocation

Net Income

Total Dividends Paid

Formula: Retention Ratio = (Net Income - Dividends) / Net Income

Retention Analysis

Retention Ratio70.0%Portion Reinvested

Dividend Payout Ratio30.0%

Net Income Distribution

Overview

Determine the percentage of net income that a company keeps to reinvest in its core business rather than paying out as dividends.

💡

Pro Tips

What is the Retention Ratio?: The retention ratio (or plowback ratio) is the portion of net income that is retained by a company rather than distributed as dividends. It reflects the company's growth strategy.
Retention vs. Payout Ratio?: They are mirror images. If the payout ratio is 30% (30% of profits paid as dividends), the retention ratio is 70%. Together they always equal 100%.
What is a 'good' Retention Ratio?: High-growth companies (like startups) usually have a 100% retention ratio. Mature companies with fewer reinvestment opportunities (like utilities) often have lower retention and high payouts.

Fun Facts

"The retention ratio is a primary component of the 'Sustainable Growth Rate' (SGR) formula."
"Warren Buffett's Berkshire Hathaway has historically had a 100% retention ratio, never paying a dividend."
"A high retention ratio only creates value if the company can reinvest those funds at a rate higher than its cost of capital."

Used with this

Similar tools that might be useful

AFFO Calculator

Calculate Adjusted Funds From Operations (AFFO), a key performance metric for Real Estate Investment Trusts (REITs).

AFN (Additional Funds Needed) Calculator

Determine the amount of external funding a business needs to support a projected increase in sales.

ARV Calculator (House Flipping)

Calculate After Repair Value and determine the maximum offer price using the 70% rule for real estate investors.