Definition
The payout ratio is the proportion of earnings a company pays out to its shareholders as dividends, usually expressed as a percentage.
Related Services
Dividend policy consulting, financial planning, and shareholder communication services help businesses manage their payout ratio and dividend strategies.
Problem and Application
A high payout ratio may indicate that a company is returning most of its earnings to shareholders, leaving little for reinvestment, while a low ratio may suggest that the company is conserving earnings for growth.
Conclusion
The payout ratio is a key indicator of a company�s dividend policy and its approach to balancing shareholder returns with reinvestment in the business.
