Asked by Jazmin Simone on Jun 11, 2024

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The percentage of net income that is added to retained earnings is called the:

A) Payout ratio.
B) Profit margin.
C) Retention ratio.
D) Internal growth rate.
E) Intensity ratio.

Retention Ratio

The proportion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Payout Ratio

The proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of the company's total earnings.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

  • Comprehend the principle of the plowback ratio and its importance in the context of an enterprise's prospective expansion.
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BS
Bradley SmithJun 18, 2024
Final Answer :
C
Explanation :
The retention ratio, also known as the plowback ratio, represents the percentage of net income that is retained by a company rather than distributed to its shareholders as dividends. This ratio indicates how much of a company's profit is reinvested in the business.