The retention ratio formula determines how much of what a company earns will be reinvested for growth. Such retained earnings may be viewed as an opportunity cost of distributing stockholders’ dividends for reinvestment in outside the company. The plowback ratio increases retained earnings while the dividend payout ratio decreases retained earnings. Plowback Ratio Formula You...Read More

The retention ratio formula determines how much of what a company earns will be reinvested for growth. Such retained earnings may be viewed as an opportunity cost of distributing stockholders’ dividends for reinvestment in outside the company. The plowback ratio increases retained earnings while the dividend payout ratio decreases retained earnings. Plowback Ratio Formula You...Read More