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Retention Ratio Calculator

Calculate Retention Ratio



Formula

The formula to calculate the Retention Ratio (RR) is:

RR=(NID)NI

Where:

What is Retention Ratio?

A retention ratio refers to the proportion of a company’s earnings that are retained and reinvested into the business rather than being paid out as dividends to shareholders. This ratio provides insight into how much of the profits a company generates are being plowed back into the business for growth and expansion.

Example Calculation

Consider an example where:

Using the formula to calculate the Retention Ratio:

RR=(100,00020,000)100,000=0.8 or 80%

This means that the retention ratio for this example is 80%.