Find the share of earnings reinvested instead of paid out.
Please do not make financial decisions based on these results.
What is the Retention Ratio Calculator?
Find the share of earnings reinvested instead of paid out. To use the Retention Ratio Calculator, enter net income, dividends; it returns retention ratio, payout ratio, and shows them instantly as you type.
Valuing a stock step by step
Begin with the P/E ratio and PEG ratio to see what the market pays for earnings and growth. Then check quality with ROE and ROIC, and compare ROIC with the WACC.
For a second opinion, estimate intrinsic value with the Dividend Discount Model Calculator or the Graham Number Calculator, then compute the margin of safety against today’s price.
- Returns. EPS, EPS growth, dividend yield and payout ratio measure what shareholders earn.
- Risk. Beta, unlevered beta and portfolio beta measure sensitivity to the market.
- Position tools. Stock average, stock split and market cap calculators keep your records straight.
How to use the Retention Ratio Calculator
- Enter your numbers. The inputs are Net income ($), Dividends ($). Take price and share figures from the latest filing or quote. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Retention ratio, and the cards below show Payout ratio. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Retention Ratio Calculator using the default values shown in the calculator above:
Inputs
| Net income ($) | 1,500,000 |
|---|---|
| Dividends ($) | 450,000 |
Results
| Retention ratio | 70% |
|---|---|
| Payout ratio | 30% |
With these inputs the calculator returns Retention ratio: 70%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Net income ($) from 1,500,000 to 1,800,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Retention ratio | 70% | 75% | +7.1% |
| Payout ratio | 30% | 25% | -16.7% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Retention Ratio Calculator reports Retention ratio and payout ratio. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
How does it relate to growth?
Sustainable growth = ROE × retention ratio.
Are valuation results investment advice?
No. They are model outputs from the figures you enter. Test a range of assumptions and speak with a licensed adviser before investing.
Where do I find the inputs?
Company filings (10-K and 10-Q), investor relations pages and your broker show earnings, equity, debt and share counts.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
Related stocks & equity analysis calculators
- Dividend Payout Ratio Calculator
- Price to Earnings Ratio Calculator
- PEG Ratio Calculator
- Price to Book Ratio Calculator
- Price to Cash Flow Ratio Calculator
- Stock Average Calculator
- Operating Cash Flow Ratio Calculator
- Price to Sales Ratio Calculator
- CAPM Calculator – Capital Asset Pricing Model
- Dividend Discount Model Calculator
- Dividend Yield Calculator
- Intrinsic Value Calculator
All Stocks & Equity Analysis calculators →