Question

In the retention growth model, the payout ratio is subtracted from one to calculate.
A. Present value ratio
B. Future value ratio
C. Retention ratio
D. Growth ratio

Answer 1

Hint: The payout ratio shows the proportion of generally overall common net earnings paid out in the shape of dividends in a major way. Calculating the retention ratio is straightforward, by subtracting the dividend payout ratio from the number one in a diffused way.

Complete answer:
The retention ratio normally especially is easy, by the usage of subtracting the dividend payout ratio from the pretty primary in a diffuse manner in a form of big way. The 2 ratios in truth particularly are aspects of the identical coin, presenting different perspectives for evaluation, displaying how the two ratios truly sort of are aspects of the very equal coin, offering quite amazing perspectives for evaluation, truly definitely contrary to for all intents and functions well-known perception, fairly opposite to popular perception. A boom investor kind of pretty interested in a business enterprise's enlargement prospects kind of is reasonably plenty more probably to genuinely specifically examine the retention ratio, whilst an earnings investor form of pretty lots extra targeted on analyzing dividends tends to apply the dividend payout ratio, or so they in reality preferred idea, which for all intents and functions is pretty large.

Hence the correct answer is option c. In the retention growth model, the payout ratio is subtracted from one to calculate the retention ratio.

Note: The retention ratio in reality is the share of earnings form of savings inside the enterprise as retained earnings, or so that they form the idea. The retention ratio refers to the percentage of commonly net income that essentially is retained to sincerely develop the enterprise, as opposed to being paid out as dividends in an essential manner. The retention ratio essentially is likewise referred to as the plow returned ratio, demonstrating that the retention ratio refers to the share of basically internet profits that especially is retained to essentially develop the enterprise, in place of being paid out as dividends, or so that they in reality thought.