Is a 60.00% retention ratio high or low?
On the defaults — $500,000 of net income and $200,000 of dividends — the retention ratio is 60.00%. A 60.00% ratio is neither high nor low on its own: it means 60 cents of every dollar of earnings is kept and 40 cents is paid out — the kept part funds growth, pays down debt, or builds a buffer. A ratio of 50–70% is typical for a mature, steady company: enough paid out to reward shareholders, enough kept to keep growing. A ratio of 0% means the company pays out everything it earns and keeps nothing — a company that pays out everything cannot fund growth from its own profit. A ratio of 100% means the company pays no dividend at all — young growth companies commonly pay nothing and reinvest everything.
Three things about the model are worth stating plainly.
First, the retention ratio is ($500,000 − $200,000) ÷ $500,000 × 100 = 60.00%. Second, the retained profit is $500,000 − $200,000 = $300,000.00 (40.00% paid out). And third, the dividends needed for a 50.00% retention is $500,000 × 50.00% = $250,000.00, and the net income allowed for a 50.00% retention is $200,000 ÷ 50.00% = $400,000.00; all listed in Accuracy & limitations.
The worked example, line by line
Setup: $500,000 net income, $200,000 dividends, target ratio 50.00%.
Line 1 — the retained profit. The retained profit is $500,000 − $200,000 = $300,000.00.
Line 2 — the retention ratio. The retention ratio is $300,000 ÷ $500,000 × 100 = 60.00%.
Line 3 — the dividends needed. The dividends needed for a 50.00% retention is $500,000 × (100% − 50.00%) = $250,000.00.
Line 4 — the net income allowed. The net income allowed for a 50.00% retention is $200,000 ÷ (100% − 50.00%) = $400,000.00.
Line 5 — the check. ($500,000 − $250,000) ÷ $500,000 × 100 = 50.00%, the target ratio; and ($400,000 − $200,000) ÷ $400,000 × 100 = 50.00%, the target ratio.
Every branch, checked
Dividends $100,000: Net income $500,000.00; dividends $100,000.00; retention ratio 80.00%; retained profit $400,000.00 (20.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $200,000.00 — With dividends of $100,000 the ratio rises to 80.00% — $400,000 stays in the business.
Net income $400,000: Net income $400,000.00; dividends $200,000.00; retention ratio 50.00%; retained profit $200,000.00 (50.00% paid out); dividends needed for the 50.00% target $200,000.00; net income allowed for the 50.00% target $400,000.00 — With net income of $400,000 the ratio falls to 50.00% — the target ratio itself — and $200,000 stays in the business.
Dividends $300,000: Net income $500,000.00; dividends $300,000.00; retention ratio 40.00%; retained profit $200,000.00 (60.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $600,000.00 — With dividends of $300,000 the ratio falls to 40.00% — $200,000 stays in the business.
Net income $1,000,000: Net income $1,000,000.00; dividends $200,000.00; retention ratio 80.00%; retained profit $800,000.00 (20.00% paid out); dividends needed for the 50.00% target $500,000.00; net income allowed for the 50.00% target $400,000.00 — With net income of $1,000,000 the ratio rises to 80.00% — $800,000 stays in the business.
Dividends $400,000: Net income $500,000.00; dividends $400,000.00; retention ratio 20.00%; retained profit $100,000.00 (80.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $800,000.00 — With dividends of $400,000 the ratio falls to 20.00% — only $100,000 stays in the business.
Net income $250,000: Net income $250,000.00; dividends $200,000.00; retention ratio 20.00%; retained profit $50,000.00 (80.00% paid out); dividends needed for the 50.00% target $125,000.00; net income allowed for the 50.00% target $400,000.00 — With net income of $250,000 the ratio falls to 20.00% — only $50,000 stays in the business.
Ratio bars — dividends $250,000, net income $600,000, dividends $150,000: dividends $250,000: retention ratio 50.00%, retained $250,000.00 (50.00% paid out); net income $600,000: retention ratio 66.67% (unrounded 66.6667%), retained $400,000.00 (33.33% paid out); dividends $150,000: retention ratio 70.00%, retained $350,000.00 (30.00% paid out) — Dividends of $250,000 give a ratio of 50.00%; net income of $600,000 gives a ratio of 66.67% (unrounded 66.6667%); dividends of $150,000 give a ratio of 70.00%.
The reverses, worked backwards
Largest dividends for the retention to STAY at or above 50.00%: At the displayed $250,000 the figures are Net income $500,000.00; dividends $250,000.00; retention ratio 50.00%; retained profit $250,000.00 (50.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $500,000.00. At the displayed $250,000 the ratio is 50.00% (exactly 50.00%). At $250,001 the ratio is 50.00% (unrounded 49.9998% — print it) — it displays as 50.00% but is below the 50.00% target — so $250,000 is the largest whole-dollar dividends for the retention to stay at or above 50.00%.
Smallest net income for the retention to reach 50.00%: At the displayed $400,000 the figures are Net income $400,000.00; dividends $200,000.00; retention ratio 50.00%; retained profit $200,000.00 (50.00% paid out); dividends needed for the 50.00% target $200,000.00; net income allowed for the 50.00% target $400,000.00. At the displayed $400,000 the ratio is 50.00% (exactly 50.00%). At $399,999 the ratio is 50.00% (unrounded 49.9999% — print it) — it displays as 50.00% but is below the 50.00% target — so $400,000 is the smallest whole-dollar net income for the retention to reach 50.00%.
Largest dividends for the retention to STAY at or above 66.67%: At the displayed $199,980 the figures are Net income $600,000.00; dividends $199,980.00; retention ratio 66.67%; retained profit $400,020.00 (33.33% paid out); dividends needed for the 66.67% target $199,980.00; net income allowed for the 66.67% target $600,000.00. At the displayed $199,980 the ratio is 66.67% (exactly 66.67%). At $199,981 the ratio is 66.67% (unrounded 66.6698% — print it) — it displays as 66.67% but is below the 66.67% target — so $199,980 is the largest whole-dollar dividends for the retention to stay at or above 66.67%.
Smallest net income for the retention to reach 66.67%: At the displayed $600,061 the figures are Net income $600,061.00; dividends $200,000.00; retention ratio 66.6701%; retained profit $400,061.00 (33.33% paid out); dividends needed for the 66.67% target $200,000.33; net income allowed for the 66.67% target $600,060.01. At the displayed $600,061 the ratio is 66.67% (unrounded 66.6701% — print it). At $600,060 the ratio is 66.67% (unrounded 66.6699996667% at 10dp — print it) — it displays as 66.67% but is below the 66.67% target — so $600,061 is the smallest whole-dollar net income for the retention to reach 66.67%.
Largest dividends for the retention to STAY at or above 25.00%: At the displayed $600,000 the figures are Net income $800,000.00; dividends $600,000.00; retention ratio 25.00%; retained profit $200,000.00 (75.00% paid out); dividends needed for the 25.00% target $600,000.00; net income allowed for the 25.00% target $800,000.00. At the displayed $600,000 the ratio is 25.00% (exactly 25.00%). At $600,001 the ratio is 25.00% (unrounded 24.9999% — print it) — it displays as 25.00% but is below the 25.00% target — so $600,000 is the largest whole-dollar dividends for the retention to stay at or above 25.00%.
Smallest net income for the retention to reach 25.00%: At the displayed $266,667 the figures are Net income $266,667.00; dividends $200,000.00; retention ratio 25.0001%; retained profit $66,667.00 (75.00% paid out); dividends needed for the 25.00% target $200,000.25; net income allowed for the 25.00% target $266,666.67. At the displayed $266,667 the ratio is 25.00% (unrounded 25.0001% — print it). At $266,666 the ratio is 25.00% (unrounded 24.9998% — print it) — it displays as 25.00% but is below the 25.00% target — so $266,667 is the smallest whole-dollar net income for the retention to reach 25.00%.
A warning about the neighbours: every neighbour above sits one dollar from the star, and every neighbour displays as the target when rounded to two decimals, yet sits below it. The ratio is linear in whole dollars, so the reverses have exact closed forms: the dividends needed is the net income times one minus the target, and the net income allowed is the dividends divided by one minus the target. The page prints the unrounded ratios in full so the rounding does not mislead you: 49.9998, 49.9999, 66.6698, 66.6701, 66.6699996667, 24.9999, 25.0001 and 24.9998. The 66.6699996667% neighbour is printed at ten decimals on purpose — its four-decimal print, 66.6700%, would read as exactly at the target while the unrounded value sits below it.
What the defaults assume
The defaults are $500,000 of net income, $200,000 of dividends and a target ratio of 50.00% — Net income $500,000.00; dividends $200,000.00; retention ratio 60.00%; retained profit $300,000.00 (40.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $400,000.00. With Dividends $100,000, Net income $500,000.00; dividends $100,000.00; retention ratio 80.00%; retained profit $400,000.00 (20.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $200,000.00. With Net income $400,000, Net income $400,000.00; dividends $200,000.00; retention ratio 50.00%; retained profit $200,000.00 (50.00% paid out); dividends needed for the 50.00% target $200,000.00; net income allowed for the 50.00% target $400,000.00. With Dividends $300,000, Net income $500,000.00; dividends $300,000.00; retention ratio 40.00%; retained profit $200,000.00 (60.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $600,000.00. With Net income $1,000,000, Net income $1,000,000.00; dividends $200,000.00; retention ratio 80.00%; retained profit $800,000.00 (20.00% paid out); dividends needed for the 50.00% target $500,000.00; net income allowed for the 50.00% target $400,000.00. With Dividends $400,000, Net income $500,000.00; dividends $400,000.00; retention ratio 20.00%; retained profit $100,000.00 (80.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $800,000.00. With Net income $250,000, Net income $250,000.00; dividends $200,000.00; retention ratio 20.00%; retained profit $50,000.00 (80.00% paid out); dividends needed for the 50.00% target $125,000.00; net income allowed for the 50.00% target $400,000.00. With Ratio bars, dividends $250,000: retention ratio 50.00%, retained $250,000.00 (50.00% paid out); net income $600,000: retention ratio 66.67% (unrounded 66.6667%), retained $400,000.00 (33.33% paid out); dividends $150,000: retention ratio 70.00%, retained $350,000.00 (30.00% paid out). With Dividends $0, Net income $500,000.00; dividends $0.00; retention ratio 100.00%; retained profit $500,000.00 (0.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $0.00 — nothing paid out, so everything stays in the business. With Net income $0, Net income $0.00; dividends $200,000.00; retention ratio undefined — there are no earnings to divide by, so there is nothing to keep a share of — the ratio is undefined, shown as undefined with that note, never a crash and never a made-up number, and no retained figure is printed for that case. With Dividends $200,000, net income $600,000, Net income $600,000.00; dividends $200,000.00; retention ratio 66.6667%; retained profit $400,000.00 (33.33% paid out); dividends needed for the 50.00% target $300,000.00; net income allowed for the 50.00% target $400,000.00 (unrounded 66.6667% — displays 66.67% but is below 66.67% unrounded). With Dividends $400,000, net income $600,000, Net income $600,000.00; dividends $400,000.00; retention ratio 33.3333%; retained profit $200,000.00 (66.67% paid out); dividends needed for the 50.00% target $300,000.00; net income allowed for the 50.00% target $800,000.00 (unrounded 33.3333% — displays 33.33% but is above 33.33% unrounded). With Dividends $600,000, net income $500,000, Net income $500,000.00; dividends $600,000.00; retention ratio −20.00%; retained profit −$100,000.00 (120.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $1,200,000.00 — the company paid out more than it earned, so the retained profit is −$100,000.00. With Dividends $200,000, net income −$500,000, Net income −$500,000.00; dividends $200,000.00; retention ratio 140.00%; retained profit −$700,000.00 (−40.00% paid out); dividends needed for the 50.00% target −$250,000.00; net income allowed for the 50.00% target $400,000.00 — negative net income, shown with a note, never hidden. With Ratio bars, dividends $250,000: retention ratio 50.00%, retained $250,000.00 (50.00% paid out); net income $600,000: retention ratio 66.67% (unrounded 66.6667%), retained $400,000.00 (33.33% paid out); dividends $150,000: retention ratio 70.00%, retained $350,000.00 (30.00% paid out).
A note on the rounding: the ratio is displayed to two decimals, half-up. At $250,001 of dividends the unrounded ratio is 49.9998% — it displays as 50.00% but is below the 50.00% target. At $399,999 of net income the unrounded ratio is 49.9999% — it displays as 50.00% but is below the 50.00% target. At $199,981 of dividends the unrounded ratio is 66.6698% — it displays as 66.67% but is below the 66.67% target. At $600,060 of net income the unrounded ratio is 66.6699996667% — it displays as 66.67% but is below the 66.67% target, and it is printed at ten decimals because its four-decimal print, 66.6700%, would read as exactly at the target. At $600,001 of dividends the unrounded ratio is 24.9999% — it displays as 25.00% but is below the 25.00% target. At $266,666 of net income the unrounded ratio is 24.9998% — it displays as 25.00% but is below the 25.00% target. At $200,000 of dividends on $600,000 of net income the unrounded ratio is 66.6667% — it displays as 66.67% but is below 66.67% unrounded. At $400,000 of dividends on $600,000 of net income the unrounded ratio is 33.3333% — it displays as 33.33% but is above 33.33% unrounded. The page prints the unrounded ratios so the rounding does not mislead you.
Output · formula · meaning
| Output | Formula | What it means |
|---|
| Net income | input | $500,000.00. |
| Dividends | input | $200,000.00. |
| Target ratio | input | 50.00%. |
| Retention ratio | (net income − dividends) ÷ net income × 100 | 60.00%. |
| Retained profit | net income − dividends | $300,000.00. |
| Payout ratio | 100% − retention ratio | 40.00%. |
| Dividends needed for the 50.00% target | net income × (100% − target) | $250,000.00. |
| Net income allowed for the 50.00% target | dividends ÷ (100% − target) | $400,000.00. |
| Verdict | what share of the profit stays in the business | 60.00% of profit kept — $300,000.00 stays in the business. |
| Reverse: Largest whole-dollar dividends for the retention to STAY at or above 50.00% | step | $250,000 → $250,000. |
| Below the revr1 star | neighbor | Net income $500,000.00; dividends $249,999.00; retention ratio 50.0002%; retained profit $250,001.00 (50.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $499,998.00. |
| Above the revr1 star | neighbor | Net income $500,000.00; dividends $250,001.00; retention ratio 49.9998%; retained profit $249,999.00 (50.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $500,002.00. |
| Reverse: Smallest whole-dollar net income for the retention to reach 50.00% | step | $400,000 → $400,000. |
| Below the revr2 star | neighbor | Net income $399,999.00; dividends $200,000.00; retention ratio 49.9999%; retained profit $199,999.00 (50.00% paid out); dividends needed for the 50.00% target $199,999.50; net income allowed for the 50.00% target $400,000.00. |
| Above the revr2 star | neighbor | Net income $400,001.00; dividends $200,000.00; retention ratio 50.0001%; retained profit $200,001.00 (50.00% paid out); dividends needed for the 50.00% target $200,000.50; net income allowed for the 50.00% target $400,000.00. |
| Reverse: Largest whole-dollar dividends for the retention to STAY at or above 66.67% | step | $199,980 → $199,980. |
| Below the revr3 star | neighbor | Net income $600,000.00; dividends $199,979.00; retention ratio 66.6702%; retained profit $400,021.00 (33.33% paid out); dividends needed for the 66.67% target $199,980.00; net income allowed for the 66.67% target $599,997.00. |
| Above the revr3 star | neighbor | Net income $600,000.00; dividends $199,981.00; retention ratio 66.6698%; retained profit $400,019.00 (33.33% paid out); dividends needed for the 66.67% target $199,980.00; net income allowed for the 66.67% target $600,003.00. |
| Reverse: Smallest whole-dollar net income for the retention to reach 66.67% | step | $600,061 → $600,061. |
| Below the revr4 star | neighbor | Net income $600,060.00; dividends $200,000.00; retention ratio 66.6699996667%; retained profit $400,060.00 (33.33% paid out); dividends needed for the 66.67% target $200,000.00; net income allowed for the 66.67% target $600,060.01. |
| Above the revr4 star | neighbor | Net income $600,062.00; dividends $200,000.00; retention ratio 66.6701%; retained profit $400,062.00 (33.33% paid out); dividends needed for the 66.67% target $200,000.66; net income allowed for the 66.67% target $600,060.01. |
| Reverse: Largest whole-dollar dividends for the retention to STAY at or above 25.00% | step | $600,000 → $600,000. |
| Below the revr5 star | neighbor | Net income $800,000.00; dividends $599,999.00; retention ratio 25.0001%; retained profit $200,001.00 (75.00% paid out); dividends needed for the 25.00% target $600,000.00; net income allowed for the 25.00% target $799,998.67. |
| Above the revr5 star | neighbor | Net income $800,000.00; dividends $600,001.00; retention ratio 24.9999%; retained profit $199,999.00 (75.00% paid out); dividends needed for the 25.00% target $600,000.00; net income allowed for the 25.00% target $800,001.33. |
| Reverse: Smallest whole-dollar net income for the retention to reach 25.00% | step | $266,667 → $266,667. |
| Below the revr6 star | neighbor | Net income $266,666.00; dividends $200,000.00; retention ratio 24.9998%; retained profit $66,666.00 (75.00% paid out); dividends needed for the 25.00% target $199,999.50; net income allowed for the 25.00% target $266,666.67. |
| Above the revr6 star | neighbor | Net income $266,668.00; dividends $200,000.00; retention ratio 25.0004%; retained profit $66,668.00 (75.00% paid out); dividends needed for the 25.00% target $200,001.00; net income allowed for the 25.00% target $266,666.67. |
| Dividends $100,000 | same model | Net income $500,000.00; dividends $100,000.00; retention ratio 80.00%; retained profit $400,000.00 (20.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $200,000.00. |
| Net income $400,000 | same model | Net income $400,000.00; dividends $200,000.00; retention ratio 50.00%; retained profit $200,000.00 (50.00% paid out); dividends needed for the 50.00% target $200,000.00; net income allowed for the 50.00% target $400,000.00. |
| Dividends $300,000 | same model | Net income $500,000.00; dividends $300,000.00; retention ratio 40.00%; retained profit $200,000.00 (60.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $600,000.00. |
| Net income $1,000,000 | same model | Net income $1,000,000.00; dividends $200,000.00; retention ratio 80.00%; retained profit $800,000.00 (20.00% paid out); dividends needed for the 50.00% target $500,000.00; net income allowed for the 50.00% target $400,000.00. |
| Dividends $400,000 | same model | Net income $500,000.00; dividends $400,000.00; retention ratio 20.00%; retained profit $100,000.00 (80.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $800,000.00. |
| Net income $250,000 | same model | Net income $250,000.00; dividends $200,000.00; retention ratio 20.00%; retained profit $50,000.00 (80.00% paid out); dividends needed for the 50.00% target $125,000.00; net income allowed for the 50.00% target $400,000.00. |
| Ratio bars — dividends $250,000, net income $600,000, dividends $150,000 | same model | dividends $250,000: retention ratio 50.00%, retained $250,000.00 (50.00% paid out); net income $600,000: retention ratio 66.67% (unrounded 66.6667%), retained $400,000.00 (33.33% paid out); dividends $150,000: retention ratio 70.00%, retained $350,000.00 (30.00% paid out). |
Who uses this
- The investor checking a growth company: they learn $500,000 of net income with $200,000 paid out is a retention of 60.00% — and they check the $250,000 reverse to see the dividends a 50.00% retention needs.
- The analyst screening for dividend cuts: they learn a falling ratio on falling earnings is the classic dividend-cut warning — and they check the $400,000 reverse to see the net income a 50.00% retention allows.
- The student learning retention measures: they learn the retention ratio is (net income − dividends) ÷ net income — and they check the $199,980 reverse to see the dividends a 66.67% retention needs.
- The founder deciding the dividend: they learn a 60.00% retention keeps $300,000.00 in the business — and they check the $266,667 reverse to see the net income a 25.00% retention allows.
Accuracy & limitations
The math is first-principles: the retention ratio is (net income − dividends) ÷ net income × 100; the retained profit is net income minus dividends; the payout ratio is 100% minus the retention ratio; the dividends needed for the target is net income times one minus the target; the net income allowed for the target is dividends divided by one minus the target — all in whole dollars, the ratio displayed to two decimals half-up. This page uses TOTALS — net income minus dividends, divided by net income — but per-share figures give the same answer: (earnings per share − dividends per share) ÷ earnings per share. At $0 of net income the ratio is UNDEFINED — there are no earnings to divide by, so there is nothing to keep a share of — the page shows the ratio as undefined with that note, never a crash and never a made-up number, and no retained figure is printed for that case. At −$500,000 of net income the ratio is 140.00% — negative net income means the company lost money yet still paid a dividend — a data problem, not a real retention rate — so the ratio is above 100% and the calculator shows the 140.00% figure with a note, never hides it and never shows “—” for it. At $600,000 of dividends on $500,000 of net income the retention is −20.00% — paying out more than the company earned means the kept share is negative — the dividend came from reserves or borrowing, and it cannot last — the calculator shows the −20.00% figure with a note, never hides it. What the model cannot do is judge the kept profit: the ratio says nothing about whether the retained profit is invested well, whether earnings are real or one-off, or whether the company is borrowing to pay the dividend — a high ratio is not automatically good: a company that keeps 90% and wastes it on bad projects is worse than one that keeps 50% and invests it well — what matters is what the kept profit earns, which is why retention times return on equity is roughly the sustainable growth rate. The ratio differs from the payout ratio: payout is the share paid out, retention is one minus the payout — so a 40.00% payout is a 60.00% retention, and the two always add to 100%. The ratio differs from dividend yield: yield is dividends per share divided by the share PRICE — it tells you the income on the price you pay — while the retention ratio is about the profit itself. The ratio differs from profit margin: margin is profit against revenue, retention is profit kept against profit earned. Buybacks are the other way cash returns to shareholders: a company that keeps 80% and buys back shares can return more cash than one that keeps 40% and buys back nothing — so read retention alongside buybacks, not alone. Use it to see what share of the profit stays in the business — then check what the kept profit earns.
Cite this calculatorBright Side Kit. “Retention Ratio Calculator: What Share of Profit Is Kept” brightoolbox.com, 2026. Method: Retention ratio = (net income − dividends) ÷ net income × 100; retained profit = net income − dividends; payout ratio = 100% − retention ratio; dividends needed at the target = net income × (100% − target); net income allowed at the target = dividends ÷ (100% − target). This page uses TOTALS — net income minus dividends, divided by net income — but per-share figures give the same answer: (earnings per share − dividends per share) ÷ earnings per share. Reverses: largest whole-dollar dividends for the retention to STAY at or above 50.00% is $250,000 (at $250,000 the ratio is 50.00%, exactly 50.00%; at $250,001 the ratio is 50.00%, unrounded 49.9998% — displays 50.00% but is below the 50.00% target); smallest whole-dollar net income for the retention to reach 50.00% is $400,000 (at $400,000 the ratio is 50.00%, exactly 50.00%; at $399,999 the ratio is 50.00%, unrounded 49.9999% — displays 50.00% but is below the 50.00% target); largest whole-dollar dividends for the retention to STAY at or above 66.67% is $199,980 with net income of $600,000 (at $199,980 the ratio is 66.67%, exactly 66.67%; at $199,981 the ratio is 66.67%, unrounded 66.6698% — displays 66.67% but is below the 66.67% target); smallest whole-dollar net income for the retention to reach 66.67% is $600,061 with dividends of $200,000 (at $600,061 the ratio is 66.67%, unrounded 66.6701%; at $600,060 the ratio is 66.67%, unrounded 66.6699996667% at 10dp — displays 66.67% but is below the 66.67% target); largest whole-dollar dividends for the retention to STAY at or above 25.00% is $600,000 with net income of $800,000 (at $600,000 the ratio is 25.00%, exactly 25.00%; at $600,001 the ratio is 25.00%, unrounded 24.9999% — displays 25.00% but is below the 25.00% target); smallest whole-dollar net income for the retention to reach 25.00% is $266,667 with dividends of $200,000 (at $266,667 the ratio is 25.00%, unrounded 25.0001%; at $266,666 the ratio is 25.00%, unrounded 24.9998% — displays 25.00% but is below the 25.00% target). Defaults: Net income $500,000.00; dividends $200,000.00; retention ratio 60.00%; retained profit $300,000.00 (40.00% paid out); dividends needed for the 50.00% target $250,000.00; net income allowed for the 50.00% target $400,000.00 Bright Side Kit. "Retention Ratio Calculator: What Share of Profit Is Kept" https://brightoolbox.com/retention-ratio-calculator/ Accessed October 27, 2026.
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Frequently asked questions
What is the retention ratio?
(Net income − dividends) ÷ net income, times 100. On $500,000 of net income and $200,000 of dividends the ratio is 60.00% — 60 cents of every dollar of earnings stays in the business.
How do I calculate the retention ratio?
Subtract the dividends from the net income, divide by the net income, and multiply by 100. ($500,000 − $200,000) ÷ $500,000 × 100 = 60.00%.
What does a 60.00% retention ratio mean?
60 cents of every dollar of earnings is kept and 40 cents is paid out. A 60.00% retention keeps $300,000.00 in the business — the kept part funds growth, pays down debt, or builds a buffer.
How much dividend can a company pay and still keep a 50.00% retention?
$250,000 of dividends on $500,000 of net income. The largest whole-dollar dividends for the retention to stay at or above 50.00% is $250,000. At $250,000 the ratio is 50.00%, exactly 50.00%.
How much can a company earn and still keep a 50.00% retention?
$400,000 of net income with $200,000 of dividends. The smallest whole-dollar net income for the retention to reach 50.00% is $400,000. At $400,000 the ratio is 50.00%, exactly 50.00%.
What if net income is zero?
The ratio is undefined. At $0 of net income the ratio is undefined — there are no earnings to divide by, so there is nothing to keep a share of — shown as undefined with that note, never a crash and never a made-up number.
What does a negative retention ratio mean?
The company paid out more than it earned. At $600,000 of dividends on $500,000 of net income the retention is −20.00% — the dividend came from reserves or borrowing, and it cannot last — and the calculator shows the −20.00% figure with a note, never hides it.
What does a retention ratio over 100% mean?
The company lost money yet still paid a dividend. At $200,000 of dividends on −$500,000 of net income the retention is 140.00% — a data problem, not a real retention rate — and the calculator shows the 140.00% figure with a note, never hides it.