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 ?
Retention rates in property, engineering, and transport insurance branch were the lowest, compared to other branches, reaching 9 per cent, 23 per cent and 21 per cent, respectively, as a result of re-insuring the bulk of these risks.
Retention rates in property, engineering, and transport insurance branch were the lowest, compared to other insurance branches, reaching 9 percent, 23 percent and 21 percent respectively as a result of reinsuring the bulk of these risks with reinsurers.
Best Value Schools has launched its newest article for ranking the top 25 colleges with high freshman retention rates by their overall return on investment
Just one year after the implementation, the university has seen a 10 to15 percent improvement in student midterm and final grades and a two and a half percent gain in retention rates.
Federal data from 2010 shows Kansas, Nebraska, North Dakota, South Dakota and Wisconsin have higher retention rates.
Around 56% of drivers have not switched insurance provider during the past year, but policyholder retention rates range from 80% for some firms to just 35% for others, according to market research group JD Power.
The 81% trainee retention rate reflected a solid year for the firm, which has reported high retention rates since 2007.
The University of Liverpool improved its retention rates, with 320 students (8.
Because law firms enter into contractual arrangements with clients, it is relatively easy to track retention rates.
However other studies concluded that F-FS appear to have reduced their retention rates compared with a regular FS [Lygidakis and Oulis, 1999; Yildiz et al.
The organisation, which says it has raised staff retention rates from 76% in 2008 to 90% last year, was named Best Employer of between 51 and 250 Staff at the North East Equality Awards.
The fact that this has raised staf retention rates so considerably is evid ence that they are really working.