Profit Retention Formula

Profit Retention Formula

Profit retained may be calculated by deducting dividend from the post tax profit during the year. This concept can be explained with following example

Example

Post Tax Profit =60,000

Dividend Paid = 20,000

Calculate Profit Retained & profit retained proportion?

Solution

Profit Retained Amount = Post tax Profit – Dividend

=60,000-20,000

=40,000

Profit Retained Proportion = 40,000/60,000

= 66.66%