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    summer1108's Avatar
    summer1108 Posts: 1, Reputation: 1
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    #1

    Jul 1, 2009, 03:39 PM
    Dividend Payout ratio
    How do you determine a dividend payout ratio?
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Jul 2, 2009, 04:42 AM
    That term could mean a couple or three different things, depending on the context. But most commonly it refers to the ratio where

    p = total dividends paid out during the period
    n = total net profit for that same period

    In other words, it's the percentage of the earnings that were paid out to the common shareholders. Note that

    (1 - payout ratio) = "plowback rate"; the percentage of the earnings that were reinvested in the company's assets and projects. I mention it because if you're dealing with payout ratio, you'll encounter plowback rate before you turn the page.

    Hope that helps a bit,
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