[amp_mcq option1=”present value ratio” option2=”future value ratio” option3=”retention ratio” option4=”growth ratio” correct=”option3″]<\/p>\n
The correct answer is: C. retention ratio<\/strong><\/p>\n The retention ratio is the proportion of earnings that a company retains, rather than paying out as dividends. It is calculated by subtracting the payout ratio from one. The payout ratio is the proportion of earnings that a company pays out as dividends.<\/p>\n The retention ratio is an important metric for investors to consider, as it indicates how much a company is reinvesting in its business. A high retention ratio suggests that a company is confident in its future prospects and is willing to invest in its growth. A low retention ratio suggests that a company is more focused on returning capital to shareholders.<\/p>\n The retention ratio is also used in the dividend growth model, which is a model that is used to estimate the future value of a dividend stream. The dividend growth model assumes that the company’s dividend will grow at a constant rate in the future. The retention ratio is used to calculate the company’s earnings growth rate, which is then used to calculate the future value of the dividend stream.<\/p>\n The retention ratio is a useful metric for investors to consider, as it provides information about a company’s investment strategy and its future prospects.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”present value ratio” option2=”future value ratio” option3=”retention ratio” option4=”growth ratio” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-49655","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n