Payout Ratio is the percentage of earnings paid out to shareholders.
It is equal to one minus the retention ratio.
It is commonly written as (1 – b)
It can be calculated as Dividends Per Share / Earnings Per Share
- An increase in the labor force participation rate.
- An increase in average hours worked.
- Additional supply of labor by immigration.
- A higher population growth rate.
The lower the ratio, the higher will be the quality of the earnings.
…operating in a highly inflationary environment, defined as cumulative inflation of more than 100% in a 3-year period.
Debt laden, cyclical companies and companies with a changing capital structure.
- Recommendations or rating categories
- Time horizon categories
- Risk categories
…the analyst simultaneously changes several key variables to generate several different scenarios.
Generally three scenarios are created:
- Most Likely
MVA = market value of (total) capital – book value of capital
Capital = debt plus equity in this case basically L+SE.
That the optimal level of debt is achieved when the extra cost of financial distress equals the tax benefit of debt.