The portion of net income that a firm reinvests in itself is called the:
A) retention ratio.
B) dividend yield.
C) dividend payout ratio.
D) internal growth rate.
E) cash influx ratio.

Question

Quizplus · Accepted Answer

The retention ratio is the portion of net income that a company decides to reinvest in the business rather than paying out as dividends to shareholders. It is calculated as (Net Income - Dividends)/Net Income.

The Portion of Net Income That a Firm Reinvests in Itself