Return On Retained Earnings - RORE

DEFINITION of 'Return On Retained Earnings - RORE'

A calculation to show how well the profits of the previous year were reinvested. RORE is expressed as a percentage. A high percentage would indicate that a company would be better off reinvesting into the business, whereas a low one would show that paying out dividends may be in the best interests of the company.

BREAKING DOWN 'Return On Retained Earnings - RORE'

As an investor, it can often be difficult to quantify a company's worth by simply looking at its balance sheet. A RORE calculation can help to alleviate some of the confusion and help clarify exactly what the numbers are trying to say. A general rule of thumb for investors is to look for companies with high RORE that is reinvested regularly.

RELATED TERMS
  1. Reinvestment Risk

    The risk that future coupons from a bond will not be reinvested ...
  2. Reinvestment Rate

    The amount of interest that can be earned when money is taken ...
  3. Reinvestment

    Using dividends, interest and capital gains earned in an investment ...
  4. SEC Form S-3D

    A filing that publicly-traded companies must submit to the SEC's ...
  5. Distribution Reinvestment

    A process whereby the distribution from a limited partnership, ...
  6. Total Return Index

    A type of equity index that tracks both the capital gains of ...
Related Articles
  1. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  2. Retirement

    Should Retirees Reinvest Their Dividends?

    Find out why dividend reinvestment may or may not be the right choice for retirees, depending on their financial needs and investment goals.
  3. Bonds & Fixed Income

    What is Reinvestment Risk?

    Reinvestment risk refers to the risk that a bond’s future coupons will have to be reinvested at a lower interest rate.
  4. Investing Basics

    Reinvesting Dividends Pays in the Long Run

    Find out why dividend reinvestment is one of the easiest ways to grow wealth, including how this tactic can increase your investment income over time.
  5. Professionals

    Importance of Reinvestment Income and Reinvestment Risk

    CFA Level 1 - Importance of Reinvestment Income and Reinvestment Risk. Learn the components of a bond's total return and how it relates to reinvestment risk. Provides two main factors affecting ...
  6. Mutual Funds & ETFs

    Reinvesting Your Mutual Fund Dividends

    Learn the benefits of reinvesting your mutual fund dividends, their impact over time, and when it is better to take the dividend payments as cash.
  7. Investing Basics

    Got Dividends? Here's How to Reinvest Them

    Reinvesting dividends is almost always a good idea if you intend to hold your shares for the long term, and there are several ways to do it.
  8. Investing Basics

    5 Ways to Lose Money With a Dividend Reinvestment Plan

    Enrolling in a dividend reinvestment plan can backfire if you're not using it wisely, costing you money in the process.
  9. Professionals

    Risk-Reduction Strategies for Stocks

    NASAA Series 65: Section 16 Risk-Reduction Strategies for Stocks. In this section diversification, dollar-cost averaging, income reinvestment, mutual fund reinvestment and dividend Reinvestment ...
  10. Professionals

    Reinvestment Risk

    CFA Level 1 - Reinvestment Risk. Discover the sources of reinvestment risk and what this means to bond holders. Compares the risk facing amortizing and non-amortizing bonds.
RELATED FAQS
  1. What are the dividend reinvestment options for a mutual fund?

    Learn about the options that shareholders have for dividend distributions made by mutual funds and why a shareholder may ... Read Answer >>
  2. Should mutual fund dividends be reinvested?

    Learn the advantages and disadvantages, as well as the tax impact, of having your mutual fund dividends automatically reinvested ... Read Answer >>
  3. Why do some companies pay a dividend, while other companies do not?

    Dividends are corporate earnings that companies pass on to their shareholders. There are a number of reasons why a corporation ... Read Answer >>
  4. What is the benefit of the Modified Internal Rate Of Return (MIRR)?

    Find out why the modified internal rate of return metric tends to be more realistic than the classic internal rate of return ... Read Answer >>
  5. What causes dividends per share to decrease?

    Learn what dividend per share is, how it is calculated and reasons why a company may decrease or remove its dividend payment. Read Answer >>
  6. How does equity financing affect a company's financials compared with the effects ...

    Understand the formula used for calculating a company's sustainable growth rate and the factors that influence changes in ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center