Retention ratio calculator
Net income of 100,000 and dividends of 40,000 leave 60,000 retained, a retention ratio of 0.6, or 60%. See how much of the period's profit stays in the company. Free in your browser.
- Free
- Runs in your browser
- No sign-up
- Your data stays on your device
Run — free
Worked example
- Net income
- 100,000
- Dividends paid
- 40,000
- Retained earnings
- 60,000
- Retention ratio
- 0.6
- Retention percent
- 60
The retention ratio, also called the plowback ratio, is the fraction of a period's net income that a firm keeps instead of paying out as dividends. Equity analysts, credit officers, and corporate-finance students use that single figure to judge how much of reported earnings is available to fund growth, to feed a sustainable-growth identity, and to pair with the complementary payout ratio. This retention ratio calculator takes two finite numbers — net income and dividends paid — subtracts dividends from net income, divides the remainder by net income, and returns the retained amount together with the ratio as a fraction and as a percent. A zero net income is rejected because the ratio is undefined when the denominator is zero.
How the retention ratio turns net income and dividends into a plowback fraction
The retention ratio, also called the plowback ratio in many textbooks, answers a narrow question: after a firm pays cash dividends from a period's net income, what fraction of those earnings remains inside the company to fund operations, debt reduction, or growth. Equivalently, the ratio is one minus the dividend payout ratio, because every unit of earnings is either distributed or retained. Net income is the bottom-line profit or loss for the period in one currency, already after interest and tax.
Dividends paid are the cash distributed to shareholders from that same period, not a declared dividend per share that you later multiply by a share count you did not send. A one-hundred-thousand net income and a forty-thousand dividend print retained earnings of sixty thousand and a retention ratio of zero point six, which is sixty percent. Zero dividends are a legitimate outcome and are not an error: a growth firm that pays nothing retains one hundred percent of earnings.
Dividends larger than net income are accepted because a firm can pay from accumulated retained earnings, and the resulting ratio is then negative rather than clamped to zero. Negative net income is accepted because a loss still has a defined ratio once dividends are known; the sign follows the arithmetic instead of hiding behind an absolute value. This calculator does not annualise a stub period, does not convert currencies, does not look up a live quote, and does not reconstruct comprehensive income from other comprehensive items.
You supply two finite numbers that already share one period and one currency; the calculator subtracts, divides, rounds retained earnings half-up to two decimal places, rounds the ratio half-up to six decimal places, and reports the same fraction as a percent rounded half-up to four decimal places so goldens compare byte-for-byte across runtimes.
Where a retention ratio calculator earns its keep
Operators screening a monthly close use a retention ratio calculator to turn last period's net income and dividends paid into one comparable plowback line before they open a full dividend-policy model. Equity analysts re-run the same two fields when a year closes or a sustainable-growth pack asks for retention, then pin the ratio next to return on equity so every memo starts from one retained-earnings fraction rather than from net income that has not been scaled by the payout.
Credit officers and board packs drop net income from the income statement and dividends from the cash-flow statement, and they compare that retention with a target payout and a historical series rather than treating any one of those as a substitute. This is a different search and a different job from a dividend payout ratio calculator, from a dividend-discount valuation, from earnings per share, and from a return-on-equity ratio: those tools start from different lines and answer different questions. Failed validation does not consume balance.
Keep both fields finite, keep net income different from zero, pin the rounded ratio in tests, and you get a reproducible retention-ratio figure for teasers, LMS plugins, and edge workers without standing up a general ledger of your own.
What you can do with it
Monthly close before the dividend-policy model
Turn last period's net income and dividends paid into one retention-ratio line before you open a full payout and plowback model.
Sustainable-growth memos and ROE packs
Pin the plowback fraction next to return on equity so a sustainable-growth pack shares one retained-earnings figure rather than unscaled net income.
Credit files and board capital-allocation packs
Drop net income and cash dividends from the statements into one retention ratio and compare it with a target payout without rebuilding the equity roll-forward.
FAQ
Can dividends be larger than net income?
Yes. A firm can pay from accumulated retained earnings. The calculator then returns a negative retention ratio instead of clamping the result to zero.
Is the retention ratio the same as one minus the payout ratio?
Yes, when both ratios use the same net income and the same dividends. This calculator returns the retention (plowback) side of that identity, not a separate payout product.
What counts as dividends paid?
The cash actually distributed to shareholders from the same period, in the same currency as net income. Do not enter a dividend per share; it would need a share count that the calculator never sees.
What happens if net income is zero?
The calculator rejects it, because the ratio divides by net income and division by zero has no answer. A negative net income, a loss, is accepted and the sign of the ratio follows the arithmetic.
What is the retention ratio used for?
It shows how much of reported earnings is available to fund growth, pay down debt or run operations. Analysts also feed it into the sustainable growth rate and pair it with the payout ratio.
Related tools
For developers — API access
Everything on this page is available programmatically. This section is for teams who want to wire it into their own systems; everyone else can just use the tool above.
API endpoint
Prefer to automate it? One authenticated POST creates the task; the result comes back by webhook or a signed link. The same capability also runs here on the web, by email and from Telegram — and soon from our app too.
Call it from your stack
curl -X POST https://api.kit.forhosting.com/fin/retention-ratio \
-H "Authorization: Bearer $KIT_KEY" \
-H "Content-Type: application/json" \
-d '{"net_income":100000,"dividends_paid":40000}'const res = await fetch("https://api.kit.forhosting.com/fin/retention-ratio", {
method: "POST",
headers: {
"Authorization": `Bearer ${process.env.KIT_KEY}`,
"Content-Type": "application/json"
},
body: JSON.stringify({
"net_income": 100000,
"dividends_paid": 40000
})
});
const { task_id } = await res.json();import os, requests
res = requests.post(
"https://api.kit.forhosting.com/fin/retention-ratio",
headers={"Authorization": f"Bearer {os.environ['KIT_KEY']}"},
json={
"net_income": 100000,
"dividends_paid": 40000
},
)
task_id = res.json()["task_id"]<?php
$res = file_get_contents("https://api.kit.forhosting.com/fin/retention-ratio", false, stream_context_create([
"http" => [
"method" => "POST",
"header" => "Authorization: Bearer " . getenv("KIT_KEY") . "\r\nContent-Type: application/json",
"content" => '{"net_income":100000,"dividends_paid":40000}',
],
]));
$task = json_decode($res, true);body := bytes.NewBufferString(`{"net_income":100000,"dividends_paid":40000}`)
req, _ := http.NewRequest("POST", "https://api.kit.forhosting.com/fin/retention-ratio", body)
req.Header.Set("Authorization", "Bearer "+os.Getenv("KIT_KEY"))
req.Header.Set("Content-Type", "application/json")
res, _ := http.DefaultClient.Do(req)Example request
{
"net_income": 100000,
"dividends_paid": 40000
}Example response
{
"task_id": "tsk_a1b2c3d4e5f6a1b2c3d4e5f6",
"type": "fin.retention_ratio",
"status": "queued",
"_links": {
"result": "/tasks/tsk_…/result"
}
}The API is asynchronous: the call returns a task_id immediately and the result arrives by webhook. Polling is capped at 1 req/s per task.
Pricing
Published price — no tokens, no invented credits. A failed task is never charged.
Errors
| HTTP | Code | Meaning |
|---|---|---|
401 | unauthorized | Missing or invalid API key. |
402 | insufficient_balance | Your balance doesn't cover the task price. |
404 | unknown_type | That task type doesn't exist. |
429 | rate_limited | Too many requests. Use the webhook instead of polling. |
Technical notes
Any input that is missing, empty, or not a finite number fails with invalid_input and is not billed.
How the retention ratio turns net income and dividends into a plowback fraction
The identity this calculator uses is retention_ratio equals net_income minus dividends_paid, all divided by net_income. Subtracting dividends from net income yields retained_earnings for the period, which this endpoint also returns so a worksheet can pin the numerator next to the ratio. A zero net income is not a legitimate retention ratio: division by zero is undefined, so the task fails with invalid_input rather than returning Infinity or a hollow empty payload.
Input contract, response shape, and error behaviour
Zero and negative dividends are allowed: a firm that pays nothing retains all earnings, and a rare dividend credit follows its sign. Dividends larger than net income are allowed and produce a negative ratio rather than an error. Example: one hundred thousand of net income and forty thousand of dividends paid yield retained earnings of sixty thousand, a retention ratio of zero point six, and a retention percent of sixty. POST a JSON body with two required finite numbers. net_income is the period bottom line in one currency; aliases earnings, net_profit, profit, and ni map to the same field so a worksheet can keep its column names. dividends_paid is the cash distributed to shareholders in that same currency and period; aliases dividends, dividend, and payout are accepted. Each numeric field may arrive as a JSON number or a numeric string. Missing fields, empty strings, and non-finite values — NaN, Infinity, or text that does not parse as a number — fail with invalid_input naming the field. Those failures are not billed. net_income must be strictly different from zero; a zero net income fails because the retention ratio is undefined when net income is zero. On success the body echoes net_income and dividends_paid, then reports retained_earnings as net income minus dividends paid (rounded half-up to two decimal places), retention_ratio as that numerator divided by net income (rounded half-up to six decimal places), retention_percent as the same fraction times one hundred (rounded half-up to four decimal places), and a formula string restating the identity. Pair the JSON with your own rule for which dividend line matches the net income you send — cash dividends from the cash-flow statement are not always equal to declared dividends on the statement of changes in equity — because this endpoint divides the two numbers you send; it does not rebuild the equity roll-forward, choose a reporting convention, or look up a filing.
Technical questions
How do I calculate the retention ratio from net income and dividends?
Send finite numbers net_income (non-zero) and dividends_paid. The API returns retention_ratio = (net_income − dividends_paid) / net_income, plus retained_earnings and the same fraction as a percent.
What happens if net income is zero?
The task fails with invalid_input. The retention ratio is undefined when net income is zero, so the request is rejected and is not billed.
What does the retention ratio calculator cost?
The browser tool is free. API requests use prepaid KIT balance at $0.002 per successful call; invalid input is not billed.