Financials
Payout ratio
A measure comparing dividends with earnings or cash flow, depending on formula.
What it means
Payout ratios help readers inspect whether distributions are large relative to a chosen denominator. The formula should always be stated because earnings-based and cash-flow-based ratios differ.
Example
A dividend divided by net income gives an earnings payout ratio.
What not to infer
A single payout ratio does not guarantee dividend safety or policy durability.