Jasz
VIP Contributor
The dividend payout ratio is the percentage of earnings that is distributed as dividends to shareholders. The higher the dividend payout ratio, the more cash flow is available to reinvest in the business and grow it.
The dividend payout ratio can be calculated by dividing net income (or operating income) by total dividends paid. In some cases, though, it can be complicated to calculate this number because it depends on a number of factors including how much cash is available for distribution and how much debt the company has taken on to fund its operations.
The dividend payout ratio can be used to compare two companies with different earnings and cash flow statements. If one company has a higher dividend payout ratio than another, it means that it is using cash flow from operations to make payments on its debt rather than reinvesting in its business. This usually indicates that the company is not doing well financially, which might indicate trouble ahead for shareholders.
The dividend payout ratio can be calculated by dividing net income (or operating income) by total dividends paid. In some cases, though, it can be complicated to calculate this number because it depends on a number of factors including how much cash is available for distribution and how much debt the company has taken on to fund its operations.
The dividend payout ratio can be used to compare two companies with different earnings and cash flow statements. If one company has a higher dividend payout ratio than another, it means that it is using cash flow from operations to make payments on its debt rather than reinvesting in its business. This usually indicates that the company is not doing well financially, which might indicate trouble ahead for shareholders.
