What is payout ratio?

Payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage. The payout ratio can also be expressed as dividends paid out as a proportion of cash flow. The Payout Ratio is calculated as follows: Payout Ratio = (Dividends per Share (DPS) / Earnings per Share (EPS)) x 100. Or.

How to calculate dividend payout ratio?

The Payout Ratio is calculated as follows: Payout Ratio = (Dividends per Share (DPS) / Earnings per Share (EPS)) x 100. Or. Payout Ratio = (Total Dividends Paid / Net Income) x 100. The Payout Ratio is also known as the dividend payout ratio.

What is the payout ratio of Company Y to company X?

Company Y has earnings per share of $2 and dividends per share of $1.50 which gives a payout ratio of 75%. Company X pays out a smaller percentage of its earnings to shareholders as dividends, giving it a more sustainable payout ratio than Company Y.

Why do supermarkets have such high payout ratios?

Mature companies such as well-established supermarkets typically have a high payout ratio in comparison as they generate stable cash flows and earnings, which can be repatriated back to shareholders as dividends Payout Ratio = Total dividends per share/Earnings per share Shareholders may be entitled to dividends if agreed by the board of directors.