This ratio is used to see the relationship between the dividends given to the equity shareholders and the earnings available for distribution to equity shareholders (i.e. Net profit after tax).
DPS (Dividend Payout Ratio): Dividends
Net Profit after Tax
The companies in the growth phase generally keep this ratio less, i.e. pay lesser dividends such that they can retain profits and plough them back to the business to sustain the growth.
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