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What does the current ratio tell you about a company?

Reducing dividends payout ratio?

  • Hello, can anyone tell me how the company can reduce its dividends payout ratio if there is any method? Thanks.

  • Answer:

    You can calculate a dividend payout ratio by dividing the dividend a company pays per share by the company's earnings per share. The normal range is 25% to 50% of earnings, though the average is higher in some sectors of the economy than in others. Some analysts think that an unusually high ratio may indicate that a company is in financial trouble but doesn't want to alarm shareholders by reducing its dividend.

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I'm not sure there is a "method" to it, they just do it. In 2008, or 09 GE reduced it's dividend drastically. It was the first time in over 50 years. They felt they could not afford their usual dividend so they cut it. They don't need permission or anything.

Eric

When the dividend tax breaks expire this year, dividends will die down with stock-buy backs for the losses on not having corperate dividends dividends. Sorry for not helping.

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