Pay-out is the distribution of net profits in the form of dividends. In particular, the payout-ratio, i.e. the ratio between dividends paid and net profits for the year, is widely used in accounting. This index represents a company’s strategic choices as for the funding of its investments. The higher the ratio, the lower the share of net profits the company can use to finance its future projects. The company’s net profits can be put to only two uses: be distributed as dividends, thus increasing the pay-out, or be kept in the company, increasing its equity and so the rate of self-financing.
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