Asked by Jazmin Simone on Jun 11, 2024
Verified
The percentage of net income that is added to retained earnings is called the:
A) Payout ratio.
B) Profit margin.
C) Retention ratio.
D) Internal growth rate.
E) Intensity ratio.
Retention Ratio
The proportion of net income that is retained by a company rather than distributed to its shareholders as dividends.
Payout Ratio
The proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of the company's total earnings.
Net Income
The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.
- Comprehend the principle of the plowback ratio and its importance in the context of an enterprise's prospective expansion.
Verified Answer
BS
Bradley SmithJun 18, 2024
Final Answer :
C
Explanation :
The retention ratio, also known as the plowback ratio, represents the percentage of net income that is retained by a company rather than distributed to its shareholders as dividends. This ratio indicates how much of a company's profit is reinvested in the business.
Learning Objectives
- Comprehend the principle of the plowback ratio and its importance in the context of an enterprise's prospective expansion.