How to Calculate Retention Rate
- 1). Look up the dividends paid per common share and the earnings per share.
- 2). Subtract the dividends paid per common share from the earnings per share to find the retained earnings per share. For example, if a company had earnings of $5 per share and paid a dividend of $2 per share, you would subtract $2 from $5 to get $3 of retained earnings per share.
- 3). Divide the retained earnings per share by the earnings per share to calculate the retention rate. In this example, you would divide $3 by $5 to get 0.6, or 60 percent, as the retention rate for the company.
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