Glossarytaught in M3.07
Retention ratio
Also called plough-back ratio, retention rate.
The share of earnings kept in the business, equal to one minus the payout ratio.
That company paying out 73.2% retains 26.8%.
Multiply it by return on equity and you get the sustainable growth rate, which is the growth the company can fund from its own earnings. A firm retaining 26.8% at an 18.6% return on equity can grow about 5% a year internally.
Growth beyond that needs outside money, and your model should say where it comes from.