Question

The plowback ratio is: equal to net income divided by the change in total equity. the percentage of net income available to the firm to fund future growth. equal to one minus the retention ratio. the change in retained earnings divided by the dividends paid. the dollar increase in net income divided by the dollar increase in sales

Answer 1

The plowback ratio is "the percentage of net income available to the firm to fund future growth".

Answer: Option B

Explanation:

The plowback ratio is a basic ratio of evaluation that calculates what profit is maintained after dividends are paid out. Most often, it is called the retention ratio. Whereas the payout ratio determines how much is being paid out in dividends as a proportion of earnings.

The plowback ratio is computed by deducting 1 from the annual dividend quotient for each share and earnings per share (EPS). At the other hand, when estimating the dividend payout ratio it can be computed by assessing the leftover funds.