Question:

Payout ratio with regards to dividend payments?

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explain

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2 ANSWERS


  1. companies generate free cash flow.

    payout ratio is a measure of how much of that money gets returned to stockholders.


  2. Payout ratio is the amount of retained earnings that are paid out in dividends.  Thats not the same thing as free cash flow.  Free cash flow is a calculation from the financial statements.  Retained earnings is an accounting entry.

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