retentions ratio

retentions ratio

a measure of the proportion of NET PROFIT which a company ploughs back into the business rather than distributing it to shareholders. Specifically the retentions ratio expresses net profit after tax and interest less DIVIDENDS declared/paid as a percentage of net profit. Thus, for example, if a company retains three-quarters of its profits and pays out only one-quarter as dividends, then its retentions ratio is 75%. The retentions ratio is the opposite of the DISTRIBUTION RATIO, See also RESERVES, RETAINED PROFITS.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson