Payout Ratio

Payout refers to the amount of profits of the company that has been paid out as dividends and has not been utilised in the business.

Payout ratio is calculated as dividend per share (DPS) divided by earnings per share (EPS) and is typically expressed as a percentage. Suppose the EPS is Rs.10 and Rs.2 is paid out as DPS, the payout ratio would be 20% (2 / 10 *100).