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

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

Quizplus · Accepted Answer

Retention ratio = (Net income - Dividends paid) / Net income
= ($298,112 - $163,961.60) / $298,112
= $134,150.4 / $298,112
= 0.4499 or 45% (rounded to two decimal places)
Therefore, the best choice is B.

Retention Ratio: a Firm Paid Out $163,961