Dividend Payout Ratio

Knowledge Center

The Dividend Payout Ratio is a model for Cash Flow Measurement, used by investors to determine whether a company is generating a sufficient level of cash flow to assure a continued stream of dividends to them. It is also a measurement of the amount of current net income, which is paid out in dividends, instead of the amount retained by the business.

Dividend Payout Ratio calculation

The Dividend Payout Ratio Formula (Cash Flow Measurement Formula) is relatively straightforward:

Divide total annual dividend payments by annual Net Income plus Noncash Expenses minus Noncash Sales.

Calculating the Dividend Payout Ratio during one year provides a very unreliable indication only. A better approach is to run a trend line on the ratio during several years to see if a general pattern of decline or increase emerges.

This ratio is useful in projecting the growth of a company as well.

Retention Ratio

Its inverse, the Retention Ratio (the amount not paid out to shareholders in the form of dividends), can help to predict a company's growth.

Forum Forum discussions about the Dividend Payout Ratio. 🔥 What is the Retention Ratio? Meaning and Usage The retention ratio (also "Retention Rate") is a financial indicator that quantifies the proportion of earnings that are kept by a firm for internal use (to be reinvested or perhaps for tax benefits) ... 3   What are the Effects of Interim Dividend? What are the effects of interim dividend declared on the company and on shareholders?... 2   1 comments Start a new topic about the Dividend Payout Ratio Sign up for free

Courses about the Dividend Payout Ratio. Beginners Course Advanced Course Course for Experts

Expert Tips Advanced insights about the Dividend Payout Ratio. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips

Information Sources Various sources of information regarding the Dividend Payout Ratio. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Financial Statement Analysis | Ratio Analysis Ratio Analysis, Finanical Statement Analysis This presentation provides insights in Financial statement and ratio analysis, and includes the following sectios: 1. F... Returns and Dividends Dividend payout ratio Study by Ian D. McManus a.o. concludes that the inclusion of Payout Ratio is an important adjunct to Dividend Yield in e... Dividend Payout Ratio Diagram Dividend Management Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in ... Introduction to the Balance Sheet Initial Understanding of a Balance Sheet, Financial Statement Analysis, Accounting This video explains the main terms you need to read a balance sheet Assets: things a company owns that have value. -...

Tools Useful tools regarding the Dividend Payout Ratio. News Videos Presentations   Books Academic More

Compare with Dividend Payout Ratio:  Cash Flow from Operations  |  Debt to Equity Ratio  |  CFROI  |  Cash Value Added  |  Cash Ratio  |  Economic Value Added

Return to Management Hub: Finance & Investing

More Management Methods, Models and Theory