Retention Ratio Calculator
Calculate your corporate Retention Ratio (Plowback Ratio). See exactly what percentage of net income is reinvested into the firm vs distributed as dividends.
Retention Ratio Calculator
Calculate your corporate Retention Ratio (Plowback Ratio). See exactly what percentage of net income is reinvested into the firm vs distributed as dividends.
How to Use Retention Ratio Calculator in 3 Easy Steps
1
Step 1
Locate the company's bottom-line Net Income on the income statement.
2
Step 2
Determine the aggregate total of Dividends paid out to shareholders during that same period.
3
Step 3
Enter the Return on Equity (ROE) in the advanced panel to predict the company’s maximum sustainable growth rate.
Frequently Asked Questions
Yes. If a company suffers a net loss for the year but refuses to cut its dividend (paying it out of cash reserves from previous years), the ratio becomes negative, signaling unsustainable financial decay.
It stems from agricultural terminology: a farmer takes a fraction of his harvest yield and "plows it back" into the earth as seeds for the next season’s growth.
This signals severe mismanagement. The company is hoarding capital and failing to deploy it efficiently. Activist investors will rapidly step in and demand the cash be paid out as dividends or used for stock buybacks.