what is the retention ratio 
the retention ratio also called the plowback ratio is the proportion of earnings kept back in the business as retained earnings it refers to the percentage of net income that is retained to grow the business rather than being paid out as dividends it is the opposite of the payout ratio which measures the percentage of profit paid out to shareholders as dividends this metric helps investors determine how much money a company is keeping to reinvest in the company s operations typically newer companies have high retention ratios as they are investing earnings back into the company to accelerate growth 