Dividend payout ratio, Finance Basics

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Dividend Payout Ratio

Dividend payout ratio = (DPS/EPS) x 100

                                    = Dividend paid/ Earning to ordinary shareholder

This is the reciprocal of dividend cover. It shows the proportion of earnings such was paid out as dividend as a payout ratio of 40% means 60% of earnings were retained as 40% was paid out like dividend,

Hence retention ratio = 1 - dividend payout ratio


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