retention rate

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Retention rate

The percentage of present earnings held back or retained by a corporation, or one minus the dividend payout rate. Also called the retention ratio.

Earnings Retention Ratio

The percentage of a publicly-traded company's post-tax earnings that are not paid in dividends. Most earnings retained are re-invested into the company's operations. Tracking year-on-year earnings retention ratios is important to fundamental analysis to investigate whether a company is increasing or decreasing its rate of re-investment. The earnings retentions ratio is calculated thusly:

Earnings retention ratio = (Net income - dividends) / Net income

For example, a company with a net income of $10 million that pays out $3.5 million in dividends has an earnings retention ratio of (10 million - 3.5 million) / 10 million = 65%. It is also called simply the retention ratio.

retention rate

The proportion of net income that is not paid in dividends. A firm earning $80 million after taxes and paying dividends of $20 million has a retention rate of $60 million/$80 million, or 75%. A high retention rate makes it more likely a firm's income and dividends will grow in future years. Also called earnings retention ratio, plowback ratio.
References in periodicals archive ?
9 percent retention rate, which is typically unheard of in the field of medical answering services.
Data indicates that when comparing the total direct premiums and net direct premiums, the retention rate of insurance companies rose 4 per cent during the first quarter to 51 per cent as compared to 47 per cent.
Data indicate when comparing the total direct premiums and net direct premiums that the retention rate of insurance companies rose 4 percent during the first quarter to 51 percent compared to 47 percent.
Nonetheless, its biggest potential is in the retention rate.
This takes the firm's overall retention rate to 76 per cent for 2014.
Results from the new retention programs have been mixed in Iowa but more successful in nearby states like Wisconsin, where the student retention rate is 58 percent.
The 81% trainee retention rate reflected a solid year for the firm, which has reported high retention rates since 2007.
Calculating a client's lifetime value is as simple as taking the present value of a client's annual profitability and assessing it against the firm's retention rate.
Some investigators reported that a FS containing F releasing particles did not show a significant difference in retention rate compared with an unfilled conventional FS [Autio-Gold, 2002; Heifetz et al.
The slide implies that ACP will cause the retention rate, which appears to be a misinformed assumption when viewed from an evidence-based perspective.
Universities across the country are in constant search for new ways to deliver college algebra and in the process improve the success rate as well as the retention rate.
We estimate that the Year Twelve retention rate was a particularly poor measure of national school completion in the early 1990s, when it appeared to peak in the official estimates.