Earnings Retention Model g=bre

Question 1

G=b*re

Used for growth if past dividends not given

Answer 1

B= earnings retention rate = (Profit after tax-dividend just paid)/PAT

re = accounting rate of return (ARR) OR (ROE) = PAT/opening capital + reserves

Question 2

Dividend payout ratio

Answer 2

If Div payout ratio is 25%, Earnings retention rate is 75%

Question 3

ARR/RE/ROE

Answer 3

PAT/Opening capital

Question 4

B

Answer 4

PAT-Dividend just paid/PAT