Plowback Ratio


Plowback Ratio

A fundamental analysis ratio that measures the amount of earnings retained after dividends have been paid out. This is the opposite of the payout ratio, which measures the amount of dividends that are paid out as a percentage of earnings. Also known as "retention rate", "retention ratio" or the "earnings retention ratio".

The idea behind the desirability of a higher ratio is that the more earnings a company retains, the more growth it can foster. However, the appropriateness of a ratio depends on the type of company. The faster a company is growing, the more desirable it would be to have a higher plowback ratio. With a slow-growing company, an investor would prefer a large payout ratio.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Earnings retention ratio — Plowback rate. The New York Times Financial Glossary …   Financial and business terms

  • earnings retention ratio — plowback rate. Bloomberg Financial Dictionary …   Financial and business terms

  • Earnings growth — In investments, earnings growth refers to the annual rate of growth of earnings. When the dividend payout ratio is same, the dividend growth rate is equal to the earnings growth rate.Earnings growth rate is a key value that is needed when the DCF …   Wikipedia

  • Internal Capital Generation Rate - ICGR — A quantifiable mathematical rate that portrays how quickly a bank is able to generate equity capital. The Internal Capital Generation Rate (ICGR) is calculated by dividing the bank s retained earnings by the average balance of the combined equity …   Investment dictionary


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