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.

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  1. Can working capital be negative?

    Working capital can be negative if a company's current assets are less than its current liabilities. Working capital is calculated ... Read Full Answer >>
  2. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  3. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  4. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  5. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  6. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>

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