Payout Ratio

Dividend payout = Cash dividends per share/Earnings per share = 2.44/ 4.37 = 55.83% 

As an alternative, the dividend payout ratio can be used to show how much the company retains instead of paying out. This is calculated as 100% - (Dividend payout) = Retained earnings 100% - 55.83% = 44.17% retained earnings. 

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The shortcoming of the maximum exposure and payout time is that they say nothing about what happens after the cashflow becomes positive (i.e. the investment is recouped). Neither do they give information about the return on the investment in terms of a ratio, which is useful in comparing projects. 

Another possibiUty is the net payout fraction (NPE), defined as the ratio of the NPT to the operating life of the venture. This is the fraction of the expected operating lifetime needed to recover the discounted investment. 

Figure 3.6a shows how costs for a new distillation system vary with the reflux ratio. It expresses the capital cost as an annual cost. This can be achieved hy dividing the capital cost by the expected payout period. A discounted cash flow (DCF) analysis is used for estimating this payout period. The capital cost shonld include the costs of auxiliaries (reboiler, condenser, vacuum equipment, pumps, piping in many cases, costs of vent systems, coolant, and heating medium handling equipment are also affected). The operating costs should include reboiler... 

If gravitational settling can be neglected and if the droplet Reynolds number Re = payout 9s is small, then the droplet deformation and possible breakup in the flow are controlled by two dimensionless groups, namely the ratio of viscous to capillary forces, or capillary number... 

The ratio of profit to investment is called return on investment (ROI). If there is a single up-front investment needed, it would be the return on original investment. A situation where continual investments are needed, such as for continual equipment upgrades, would be better calculated as return on average investment. Another common term used to determine the desirability of a project is the payout time. This is done by calculating the sum of profit plus depreciation each year until the sum equals the value of the investment. The lower the payout time, the more financially attractive is the project. 

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