retention

(noun)

The act of retaining; something retained

Related Terms

Examples of retention in the following topics:

  • Dividend Payments and Earnings Retention

    • The dividend payout and retention ratios offer insight into how much of a firm's profit is distributed to shareholders versus retained.
    • These retained earnings can be expressed in the retention ratio.
    • Retention ratio can be found by subtracting the dividend payout ratio from one, or by dividing retained earnings by net income.

  • The Cost of Retained Earnings

    • Retained earnings can be expressed as a ratio known as the "retention rate. "
    • The retention rate also can be expressed in terms of the dividend payout ratio: .
    • The retention rate and the dividend payout rate are opposites, as are retained earnings and dividends paid out.

  • Liquidation Preference

    • After the removal of all assets which are subject to retention of title arrangements, fixed security, or are otherwise subject to proprietary claims of others, the liquidator will pay the claims against the company's assets.
    • Property which is in the possession of the company, but which was supplied under a valid retention of title clause will generally have to be returned to the supplier.
    • After the removal of all assets which are subject to retention of title arrangements, fixed security, or are otherwise subject to proprietary claims of others, the liquidator will pay the claims against the company's assets.

  • Relationships between ROA, ROE, and Growth

    • Its retention rate is 80%, and its shareholder equity is equal to $1,500,000.
    • In other words, changes in the retention or dividend payout ratios can lead to changes in measured capital intensity.

  • Assessing Internal Growth and Sustainability

    • Its earnings retention rate is 80%.
    • We find the internal growth rate by dividing net income by the amount of total assets (or finding return on assets) and subtracting the rate of earnings retention.
    • We find the sustainable growth rate by dividing net income by shareholder equity (or finding return on equity) and subtracting the rate of earnings retention.

  • Additional Funds Needed (AFN)

    • RR=the retention ratio from net income (equal to 1 minus the dividend payout ratio; disregard if dividends are not declared).

  • Investor Preferences

    • In short, when the retention rate increases, they require a higher discounting rate.