Suppose a firm pays total dividends of $489,000 out of net income of $5 million. What would the firm's retention ratio be?

Name: Suppose a firm pays total dividends of $489,000 out of net income of $5 million. What would the firm's retention ratio be?
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The retention ratio is calculated as 1 minus the dividend payout ratio. The dividend payout ratio is $489,000 / $5,000,000 = 0.0978 or 9.78%. Therefore, the retention ratio is 1 - 0.0978 = 0.9022 or 90.22%.

Suppose a Firm Pays Total Dividends of $489,000 Out of Net