Equity / Dividend Metric

Retention Ratio

Definition

The percentage of earnings retained by the company for reinvestment rather than paid out as dividends. Also called the plowback ratio, it reflects reinvestment capacity for growth.

Formula / Rules
1 - Dividend Payout Ratio
Example
A 60% retention ratio means the company keeps 60% of earnings for growth.
Related Terms
Dividend Payout Ratio Growth Investing Return on Equity (ROE)
Frequently Asked Question
What is Retention Ratio?
Retention Ratio (also called plowback ratio) measures the share of earnings a company keeps for reinvestment. A high retention ratio typically signals a growth-focused company.
APA Citation
Clark, R. (2025). Retention Ratio. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/retention-ratio
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.