How to calculate plowback ratio?

Understand the Problem

The question is asking for the method or formula to calculate the plowback ratio, which is a financial metric used to evaluate the proportion of earnings that a company retains for reinvestment rather than distributing it as dividends.

Answer

(Net Income - Dividends) / Net Income

The final answer is (Net Income - Dividends) / Net Income

Answer for screen readers

The final answer is (Net Income - Dividends) / Net Income

More Information

The plowback ratio is useful for investors to understand how much profit the company is reinvesting into its business rather than paying out as dividends.

Tips

A common mistake is to forget to subtract preferred dividends from net income when calculating the ratio.

Sources

AI-generated content may contain errors. Please verify critical information

Thank you for voting!
Use Quizgecko on...
Browser
Browser