The retention ratio measures the share of earnings a company keeps.
Retention Ratio Calculator
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Results
Retained earnings
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Retention ratio
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Table of Contents
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What is Retention Ratio?
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How to Use This Calculator
- Enter or select Net income, Dividends paid.
- Check the unit beside each measurement. For a percentage or rate, use the scale and time period stated in the form.
- Choose Calculate, then compare the output with the formula and example below. If you change a value or option, calculate again to update the result.
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Formula Used
Retention = (net income−dividends)/net income
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Variables Explained
| Input | What it means |
|---|---|
| Net income | Earnings after the relevant expenses, interest and taxes for the reporting period. |
| Dividends paid | The distribution paid to shareholders for the same period as the earnings figure. |
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Worked Example
Income of 100 and dividends of 25 give retention of 75%.
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Why Use This Calculator?
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
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Common Mistakes
- A loss or zero income makes the usual percentage difficult to interpret.
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Frequently Asked Questions
Should I use monthly or annual figures?
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Does the result include fees and tax?
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.
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Sources & References
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