Latest posts
-
Retention Ratio: Evaluating Earnings Reinvestment and Dividend Policy
Understanding the Retention Ratio The retention ratio is a corporate finance metric that measures the proportion of net income a company retains after distributing dividends to shareholders. It provides insight into how management allocates earnings between immediate shareholder returns and reinvestment in the business. The ratio is particularly relevant when assessing dividend policy, internal financing…
-
What Retained Earnings Are: How Companies Use Profits to Grow, Pay Dividends, and Build Long-Term Value
Every business generates profits with the hope of building something sustainable. But profit alone does not tell the whole story. What truly shapes a company’s future is what it chooses to do with that profit. Some firms distribute earnings immediately to shareholders, while others keep a portion inside the business to fuel expansion, strengthen operations,…