CoachA firm’s retention ratio is the share of a year’s profit it keeps as capital instead of distributing to its owners; one minus it is the payout ratio.
Examples
Example 2.2 (An allocation)
Four members hold 40, 30, 20 and 10 points and draw 80% of their allocations. A year’s profit of $116.25 million allocates $46.5 million to the first; she draws $37.2 million and $9.3 million stays in her capital account. In all the members draw $93.0 million and leave $23.25 million, a retention ratio of 20%.