What is dividend Payout Ratio?

Dividend Payout Ratio:-

 

Corporations Payout a portion of their earnings as dividend to the shareholders and retain a portion of earnings as retained earnings. The portion of earnings paid as dividend to the shareholders divided by net income is called dividend payout ratio. 

For example XYZ a company has BDT 100000 as net income. It distributes BDT 40000 as dividend to its common shareholders so the dividend payout ratio of XYZ Company will be-

Payout ratio = Dividend / Net income

                   = 40000/100000

                   = 40%