What is the percentage of a firm's net income which is reinvested in the firm to support future growth called?
A)payout ratio
B)distribution percentage
C)retention ratio
D)equity ratio
E)equity reinvestment

Question

Quizplus · Accepted Answer

The percentage of a firm's net income that is reinvested in the firm to support future growth is called the retention ratio. This ratio is calculated by subtracting the dividend payout ratio from 1. The dividend payout ratio is the percentage of net income paid out as dividends to shareholders. Therefore, the retention ratio represents the portion of net income that is retained by the firm for future growth and is not paid out to shareholders as dividends.

What Is the Percentage of a Firm's Net Income Which