Equity Valuation

Retention Ratio

Definition

What is Retention Ratio?

The proportion of earnings retained after dividends.

Example in practice

A 40% payout ratio implies a 60% retention ratio.

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Net income attributable to ordinary shareholders divided by weighted average ordinary shares.

Earnings per share assuming potentially dilutive securities convert into ordinary shares.

Earnings per share calculated using actual weighted average ordinary shares outstanding.

Cash generated or used by a company's core operations.

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