Dividend Payout Ratio

Posted in Finance, Accounting and Economics Terms, Total Reads: 1625

Definition: Dividend Payout Ratio

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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