Example:
Company ABC has declared dividends of 50,000 to its shareholders for the fiscal year. The company reported net income of 200,000 for the same period.
What is the dividend payout ratio ?
Answer:
Dividends Paid = 50,000 Net Income = 200,000
DPR= (50,000 /200,000) * 100
DPR = 0.25 * 100=25%
This means that the company distributed 25% of its net income as dividends to shareholders for the fiscal year.
Reference (External Link): https://Corporatefinanceinstitute.com