WARREN BUFFETT’S TEST FOR RETAINED EARNINGS
AN ALTERNATE TEST FOR WARREN BUFFETT?
- Alcoa earned a total of $9.56 per share. It paid a total of $ 1.55 to shareholders by way of dividends.
- This means it retained profits over that period amounting to $8.01.
- In that period, earnings per share grew from .24 to 1.79.
- That is, all the profits retained by the company ($8.01 per share) resulted in the earnings per share rising 1.55 (1.79-.24).
- To show the return percentage, the calculation is