Suppose a firm pays total dividends of $750,000 out of net income of $2 million. What would the firm's retention ratio be?

Name: Suppose a firm pays total dividends of $750,000 out of net income of $2 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 $750,000 / $2,000,000 = 0.375 or 37.5%. Therefore, the retention ratio is 1 - 0.375 = 0.625 or 62.5%.

Suppose a Firm Pays Total Dividends of $750,000 Out of Net