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To reinvest earnings in a business rather than pay out them out as dividends. Common practice in high-growth companies.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
To reinvest a company's earnings into its operations. A high growth company often plows back the majority of its earnings rather than pays out dividends in order to maintain its high growth rate. On the other hand, established companies tend to plow back very little, unless they are attempting to corner or create a new market. The plowback ratio tells investors the rate at which companies do this.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
To reinvest earnings in additional income-producing assets. Firms that plow back earnings rather than paying the earnings in dividends tend to experience more rapid increases in earnings per share.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.