Calculate retention ratio given the following information: net income = $8,000; cash dividends paid = $4,400.

Name: Calculate retention ratio given the following information: net income = $8,000; cash dividends paid = $4,400.
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Question

Quizplus · Accepted Answer

The retention ratio is calculated as the portion of net income that is retained in the business rather than paid out as dividends. It is calculated as (Net Income - Dividends) / Net Income. Using the given figures: ($8,000 - $4,400) / $8,000 = $3,600 / $8,000 = 0.45 or 45%.

Calculate Retention Ratio Given the Following Information: Net Income =