distribution ratio

distribution ratio

a measure of the proportion of NET PROFIT which a company distributes to SHAREHOLDERS instead of ploughing it back into the business. Specifically, the distribution ratio expresses DIVIDENDS as a percentage of net profit after tax and interest. Thus, for example, if a company pays out one-quarter of its profits as dividends, then the distribution ratio is 25%. The distribution ratio is the opposite of the RETENTIONS RATIO and the mirror image of the DIVIDEND COVER ratio. See RESERVES, RETAINED PROFIT.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson