# Payout Ratio

## Payout Ratio

Payout Ratio indicates as to what proportion of earning per share has been used for paying dividend and what has been retained.

Dividend payout ratio is very important for shareholder’s to know that if a company has used whole or substantially the whole of its earning for paying dividend and retained nothing for future growth and expansion purposes, then there will be very low chances of capital appreciation in the price of shares of such company.

## How to calculate Payout Ratio?

It is calculated as follows:

Or

**NEXT – Market Test Ratios: Dividend Yield Ratio**

**Table of Contents
1) Market Test Ratios: Introduction
2) Market Test Ratios: Earning per Share Ratio
3) Market Test Ratios: P/E Ratio
4) Market Test Ratios: Payout Ratio
5) Market Test Ratios: Dividend Yield Ratio
6) Market Test Ratios: Price/Cash flow Ratio
7) Market Test Ratios: Price to book value Ratio
8) Market Test Ratios: Price/Sales Ratio
9) Market Test Ratios: Price/Earnings To Growth Ratio**