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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
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.
References in periodicals archive ?
The 2017-18 school report card for the district showed a three-year average retention rate of 86.4%.
We saw more than a 10% increase in the retention rate of people who open Snapchat for the first time."
With Stable Outlook, the rating affirmation reflects a resilient business model characterised by revenue visibility, due to a high contract retention rate and benefiting from a growing trend of outsourcing in many sectors.
In turn, Class A units, which are most vulnerable to competition from new supply, have seen lower retention, which has impacted the overall retention rate.
Last semester, Meredith College implemented a new academic-standing policy that initially put us at a disadvantage in our goal to reach an 80 percent firstyear retention rate. We came up just short-79.9 percent returned to campus this fall-bur we were not disheartened in the least.
LPL's retention rate for advisor fees and commissions this year stands at 95%.
Screening retention was defined as the receipt of a subsequent screening mammogram between 9 and 30 months from the index date (see Figure 1), as 30-month is consistent with the definition for calculating retention rate in Canada.
Patients with partial epilepsy who received monotherapy with one of six AEDs, namely, CBZ, VPA, topiramate (TPM), oxcarbazepine (OXC), lamotrigine (LTG), or levetiracetam (LEV), were identified and followed up from May 2007 to October 2014, and time to first seizure after treatment, 12-month remission rate, retention rate, reasons for treatment discontinuation, and adverse effects were evaluated.
Moreover, customer activity could be an answer to the research debate about the significant relationship between retention rate and lifetime profitability of customers.
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.
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.
At the state-based exchanges that could provide comparable data, the projected 2015 retention rate was just 69 percent.