Dividend payout ratio
Dividend Payout Ratio
Valuation RatiosThe share of net profit paid out as dividends. The remainder, the retention ratio, is reinvested in the business.
Formula
Payout Ratio = Dividends Paid / Net Profit
Why it matters
A high payout signals limited reinvestment opportunities or shareholder-friendly policy; a low payout should be justified by high returns on the retained capital.
Indian example
Related terms
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