A financial ratio that relates cash dividends to total shares outstanding. That is:
For example, if a company with 30,000 shares outstanding has produced a net income of $100,000 and intends to retain 50% therefore (as retained earnings) and distribute the remaining (dividend payout ratio= 50%), then its dividends per share are:
Dividends per share = 50,000 / 30,000 = $1.66
This means every share outstanding has the right to receive $1.66.
