A firm paid out $163,961.60 as dividends on net income of $298,112. What is the firm's retention ratio?

Question

Quizplus · Accepted Answer

The retention ratio can be calculated as: Retention Ratio = (Net Income - Dividends) / Net Income
Substituting the given values, we get: Retention Ratio = (298,112 - 163,961.60) / 298,112 = 0.4517
Converting to a percentage, the retention ratio is 45.17%, which is closest to option B. Therefore, the best choice is B.

A Firm Paid Out $163,961