What is the Full Form of DPR in the Share Market?
The DPR in Full Form in the Share Market is Dividend Payout Ratio. This is a financial metric that helps us measure the proportion of the earnings of the company that it distributes in the form of dividends to its shareholders. It gives a brief idea of how much of the company’s earnings are returned to the investors and how much is being retained for business reinvestment.
Dividend payout ratio calculation:
The dividend payout ratio is calculated by dividing the dividends of the company by the net income and then multiplying the result by 100. This ratio is always expressed as a percentage.
Dividends
DPR = ————————– x 100
Net Income
Interpretation of dividend payout ratio:
The DPR of the company will depend on the industry it operates, the nature of the business, and the business plan of the company. Companies that are growing fast generally report a lower dividend payout ratio, as their earnings are reinvested into the company for further expansion an growth. Companies that grow slowly and those that expand the business through large capital expenditures will report a higher dividend payout ratio. Investors looking to avail a higher DPR should accordingly choose the companies they invest in.