Retention ratio is also known as Ploughback ratio.

It is a fundamental analysis ratio that measures the proportion of earnings that is retained back in the business rather than being paid out as dividends to shareholders. It is the opposite metric of Dividend Payout Ratio.

At the end of every fiscal a company generates earnings that may be positive (profits) or negative (losses). A company with profits provides its management with ample space to utilize this surplus for a number of purposes. They may decide to pay the entire profit to the shareholders as dividends, can retain it to reinvest for growth purpose or can also opt for a combination of both.