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Return on Average Assets (ROAA) What ROAA measures Return on Average Assets (ROAA) assesses how efficiently a company uses its assets to generate profit. It is commonly used for banks and other financial institutions but is applicable across industries. ROAA smooths asset fluctuations over a reporting period by using average assets rather than a single-point…

Return on Assets (ROA) Return on Assets (ROA) measures how efficiently a company uses its assets—buildings, equipment, inventory, cash—to generate net income. Expressed as a percentage, ROA helps investors and managers compare profitability relative to the asset base. Why ROA matters Shows how effectively management converts assets into profit. Useful for comparing firms within the…

Return of Capital (ROC) Return of capital (ROC) is a distribution that repays part of an investor’s original principal rather than representing earnings. ROC reduces an investment’s adjusted cost basis and is generally not taxed as income. Once the cost basis reaches zero, further non-dividend distributions are taxed as capital gains. Key takeaways ROC returns…

Return A return is the gain or loss an investment generates over time. It can be expressed as a dollar amount (nominal) or as a percentage (rate of return). Returns may be reported gross (before fees, taxes, inflation) or net (after those costs). Total return for stocks includes both price change and income such as…

Retrocession: Definition, Types, Example, and Criticisms What is retrocession? Retrocession refers to commissions, kickbacks, trailer fees, or finder’s fees that a third party (for example, a bank or fund) pays to advisers, distributors, or wealth managers in exchange for channeling client assets or promoting certain financial products. These payments are typically funded from client assets…

Retracement Definition A retracement is a short-term, temporary move in a financial instrument that goes against the prevailing trend. It’s a pause or pullback within an ongoing uptrend or downtrend, after which the original trend typically resumes. How retracements work Retracements are countertrend moves that do not break key trend structure (support in an uptrend…

Retirement Planning: Steps, Stages, and What to Consider Key takeaways * It’s never too early—or too late—to start saving for retirement. Time and consistency are major advantages. * A retirement plan covers saving, investing, and later withdrawing funds to support your desired lifestyle. * Tax-advantaged accounts (employer plans, IRAs) are central to most plans; contribution…

Retirement Money Market Account A retirement money market account is a money market deposit account held inside a retirement vehicle (for example, an IRA, Roth IRA, rollover IRA, or 401(k)). It invests your cash in low-risk, short-term instruments such as certificates of deposit (CDs), Treasury bills, and commercial paper. Its primary purpose is to provide…

Retirement Income Certified Professional (RICP) — Overview The Retirement Income Certified Professional (RICP) is a specialized credential for financial professionals who focus on retirement income planning. RICPs help retirees and near-retirees convert accumulated assets into sustainable income, preserve standards of living, address income gaps, manage risks, and support tax and estate planning decisions. Who the…

Retention Ratio The retention ratio (also called the plowback ratio) is the portion of a company’s net income that is kept in the business as retained earnings rather than paid out as dividends. It indicates how much profit a company reinvests to fund growth. Key points Retention ratio = 1 − payout ratio. Retained earnings…

Retention Bonus A retention bonus is a one-time financial incentive paid to an employee to encourage them to remain with an employer through a critical period—such as a merger, reorganization, project completion, or other times when losing key talent would be costly. Employers use retention bonuses to preserve institutional knowledge and keep essential work on…

Retainer Fee A retainer fee is an advance payment made to secure a professional’s services — commonly used with lawyers, consultants, freelancers, and accountants. It acts as a down payment or deposit that ensures the professional’s availability and covers initial work or expenses. Retainers do not guarantee a specific outcome or represent the total final…

Retained Earnings What are retained earnings? Retained earnings are the cumulative net income a company keeps after paying dividends to shareholders. They represent profits that have been reinvested in the business or held as reserves rather than distributed. Explore More Resources › Read more Government Exam Guru › Free Thousands of Mock Test for Any…

Retail Sales: Definition, Measurement, and Why It Matters Key takeaways Retail sales measure consumer purchases of finished goods and are a primary indicator of consumer demand. The U.S. Census Bureau compiles monthly retail sales data from retailers and food-service outlets. Analysts often exclude volatile categories such as autos and gasoline to better gauge underlying consumer…

Retail Price Index (RPI) The Retail Price Index (RPI) is a longstanding measure of consumer price inflation in the United Kingdom. First calculated in 1947 and regularly published since 1956, RPI was the U.K.’s principal inflation measure until it was superseded by the Consumer Prices Index (CPI) as the official target measure in 2003. Although…

Retail Investor Definition A retail investor (or individual investor) is a non-professional who buys and sells securities, mutual funds, ETFs, and other financial products for a personal account. Retail trades are typically much smaller in size than those made by institutional investors, but collectively retail activity can influence market sentiment and prices. Key takeaways Retail…

Retail Banking: Services, Types, and How It Works Retail banking (also called consumer or personal banking) delivers financial services to individual consumers rather than businesses or institutions. It includes deposit accounts, credit products, payment services and increasingly digital channels that let people manage money, borrow, and invest for personal needs. Key takeaways Retail banks serve…

Resume Essentials A resume is a concise summary of your qualifications—work experience, education, skills, and accomplishments—designed to secure a job interview. Keep it focused, error-free, and tailored to each role you apply for. Aim for one to two pages unless an employer requests otherwise. Key takeaways Customize your resume for each job; highlight achievements and…

Restructuring Charge A restructuring charge is a one-time expense recorded when a company reorganizes its operations. It reflects upfront costs associated with actions intended to improve long-term efficiency and profitability, such as layoffs, plant closures, lease terminations, asset write-downs, or relocating production. Key takeaways A restructuring charge is a nonrecurring, upfront operating expense tied to…

Company Restructuring: Processes, Examples, and Key Concepts What is restructuring? Restructuring is a deliberate, significant change to a company’s financial arrangements, operations, or organizational structure intended to address financial distress, improve efficiency, or prepare the business for a sale, merger, or ownership transition. Actions can include debt renegotiation, operational realignment, asset sales, leadership changes, or…

Restrictive Covenant: Definition and Overview A restrictive covenant is a clause in a contract that limits, prohibits, or requires certain actions by a party named in the agreement. These clauses are used across real estate, finance, and employment to protect value, manage risk, and preserve agreed standards of use or behavior. Violating a restrictive covenant…

Restricted Stock Unit (RSU): How They Work, Taxation, Pros & Cons What is an RSU? A restricted stock unit (RSU) is an employer grant that promises company shares to an employee after certain conditions are met—most commonly, remaining with the company for a set vesting period or achieving performance milestones. RSUs have no transferable value…

Restricted Stock Key takeaways * Restricted stock are company shares granted to employees that carry transfer and sale restrictions until certain conditions are met. * Vesting schedules (time-based or performance-based) determine when the shares become transferable and taxable. * Two common forms are Restricted Stock Awards (RSAs) — actual shares granted at award — and…

What Is Restricted Cash? Restricted cash is money a company has set aside for a specific purpose and therefore cannot be used for general operations. Unlike unrestricted cash, restricted cash is not freely available for spending or investment. The reason for the restriction is typically disclosed in the notes to the financial statements. Key Takeaways…

Understanding Restatements A restatement is a revision of previously issued financial statements to correct material errors. Companies must issue restatements when inaccuracies are significant enough to potentially mislead users of the financial statements. While restatements restore accuracy, they can damage investor confidence, depress share prices, and create legal or regulatory exposure. Key points at a…

Resource Curse Key takeaways The resource curse is a paradox where countries rich in non-renewable resources underperform economically. Overreliance on a single resource sector can crowd out other industries and make growth vulnerable to commodity-price swings. Political effects—corruption, authoritarian entrenchment, and conflict—often accompany resource dependence. Economic diversification and value-chain development are critical to avoiding long-term…

Resolution Trust Corporation (RTC): What It Was and How It Worked What the RTC was The Resolution Trust Corporation (RTC) was a temporary federal agency created to resolve the U.S. savings and loan (S&L) crisis. Operating from 1989 to 1995, the RTC took control of failed thrifts placed in receivership, sold or merged troubled institutions,…

Resistance (Resistance Level) Key takeaways Resistance is a price point or zone where selling pressure tends to prevent an asset from rising further. It can be a single price (e.g., an intraday high) or a zone spanning several price points. Resistance appears on any timeframe; daily and weekly resistance are generally stronger than hourly or…

Residual Value Explained Residual value (also called salvage value or scrap value) is an asset’s estimated worth at the end of its useful life or lease term. It’s a core input for depreciation schedules, lease payments, capital budgeting, and buyout prices. Why residual value matters Determines depreciation expense and affects reported earnings and taxes. Influences…

Residual Sum of Squares (RSS) The residual sum of squares (RSS) quantifies the discrepancy between observed values and the values predicted by a regression model. It is the sum of the squared residuals (errors) and is widely used to assess how well a model fits data: lower RSS indicates a better fit, and RSS =…

Residual Standard Deviation What it is Residual standard deviation (also called the residual standard error or standard error of the estimate) quantifies how far observed values fall from the values predicted by a regression model. It is a measure of the typical size of prediction errors (residuals): smaller values indicate that the model’s predictions are…

Residual Income Residual income is money that continues to flow after an initial investment of time, effort, or capital. Common sources include dividends, rental income, royalties, and interest. The term can refer to different concepts depending on context: a personal disposable income measure, a corporate performance metric, or a valuation method for stocks. Key takeaways…

Residual Dividend What it is A residual dividend policy is a corporate approach in which a company pays dividends only from earnings left over after funding its capital expenditures (CapEx) and working capital needs. Under this policy, dividends fluctuate with investment requirements: when the company needs to reinvest more, dividend payouts fall; when investment needs…

Residential Mortgage-Backed Security (RMBS) What is an RMBS? A residential mortgage-backed security (RMBS) is a debt instrument created by pooling many residential mortgages and selling interests in that pool to investors. Investors receive payments derived from the principal and interest paid by the underlying borrowers. RMBS can offer higher yields than government bonds but carry…

Resident Alien What is a resident alien? A resident alien is a foreign-born person who legally resides in the United States but is not a U.S. citizen. In U.S. immigration and tax contexts, a person is treated as a resident alien if they either hold (or held in the previous calendar year) lawful permanent resident…