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Plowback Ratio Calculator

Enter EPS and dividends per share to get the plowback and payout ratios.

How it is calculated

Enter earnings per share EPS and dividends per share DPS in the same currency and for the same period. The tool computes the payout ratio payout = DPS / EPS and the plowback ratio plowback = 1 − payout, both shown as percentages with two decimals. The two always add up to 100%.

EPS must be above zero, since a company with zero or negative earnings has no meaningful payout ratio, and DPS cannot be negative; otherwise there is no result. If DPS is higher than EPS, the tool caps it at EPS, so it shows a payout of 100% and a plowback of 0% rather than a negative plowback. Dividends paid out of past reserves are therefore not reflected.

Worked example

A company earns 4.00 per share and pays 1.00 per share in dividends. Payout ratio: 1 / 4 = 0.25, or 25.00%. Plowback ratio: 1 − 0.25 = 0.75. The result is 75.00% plowback, meaning three quarters of earnings are kept in the business. If the dividend were 5.00, the tool would show 0.00% plowback and 100.00% payout.

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Common mistakes

  • Mixing total and per-share figures. Use dividends per share with EPS, or total dividends with net income, but not one of each.
  • Mixing periods, such as annual dividends with quarterly EPS. The ratio would be roughly four times too high.
  • Entering the payout ratio itself as DPS. The tool asks for amounts per share in currency, not percentages.
  • Treating a high plowback as always good. It only says earnings are retained; whether the retained money earns a good return is a separate question.
  • Using a loss year. With EPS at zero or below the tool returns nothing, because a payout ratio cannot be judged against negative earnings.

Sources

About this calculator

This calculator computes the plowback (retention) ratio from per-share figures as 1 − (dividends per share ÷ EPS), and reports its complement, the payout ratio (dividends per share ÷ EPS), alongside it. A plowback ratio of 0.7 means 70% of each dollar earned is retained and reinvested in the business, while the remaining 30% is paid out to shareholders as dividends.

Growth investors watch this ratio because a high plowback rate signals a company reinvesting heavily in expansion rather than returning cash — appropriate for a young, high-growth company but worth questioning in a mature one. It's also a direct input to the sustainable growth rate formula (ROE × plowback ratio), which estimates how fast a company can grow without external financing.

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Comments (1)

  • Editorial team

    Plowback tells you how much profit stays inside the company, not how well it is used. To judge that, multiply it by return on equity, which gives the sustainable growth rate. With a 75% plowback and a 12% ROE, that is 9% growth without outside financing. A company that retains almost everything but earns a poor ROE is simply piling up cash. Which sectors do you compare this ratio across, and what range looks normal to you?

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