Reinvestment Rate
Definition
The Reinvestment Rate is the percentage of earnings or profits that a company chooses to reinvest in its operations instead of distributing as dividends, indicating growth priorities.
Benefits
The reinvestment rate shows the portion of profits a company reinvests in its growth rather than paying dividends.
Frequently Asked Questions
What is a reinvestment rate? The reinvestment rate shows how effectively a company reinvests its profits into new projects or investments to generate further returns.
What is the meaning of reinvestment of earnings? Reinvestment of earnings is when a company uses its profits to grow the business or reduce debt, instead of paying dividends.
What is the reinvestment ratio of a company? The reinvestment ratio shows how much of a company`s earnings are reinvested into its growth, calculated by dividing retained earnings by net income.
Summary
The reinvestment rate shows how much of a company`s earnings are put back into the business.