lewis3363 lewis3363
  • 15-04-2020
  • Business
contestada

Which term can be defined as the net income that a firm reinvests in itself?

Respuesta :

ayokenny2001
ayokenny2001 ayokenny2001
  • 20-04-2020

Answer:

retention ratio

Explanation:

Retention ration is the portion of net income retained by a firm to grow its business rather than being declared and paid as dividened.

When a company makes profit at the end of financial period, the company can either retain part of its earning for business expansion, declare part as dividends paid to shareholder or combine both.

Where a firm now reinvest the portion of the profit earned in itself, it is called retention ratio.

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