Retention Ratio

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Retention ratio, abbreviated as RR, measures the amount of earnings retained by a company after dividends have been paid out.

 

Retention Ratio Formula

\(\large{ RR =  \frac{ RE }{ NI }   }\)  

Where:

\(\large{ RR }\) = retention ratio

\(\large{ NI }\) = net income

\(\large{ RE }\) = retained earnings