The DPR is a model for Cash Flow Measurement used by investors to
determine if a company is generating a sufficient level of cash flow to
assure a continued stream of dividends to them. It is also a
measurement of the amount of current net income paid out in dividends
rather than retained by the business.
The DPR Formula for cash flow measurement is relatively straightforward:
Divide the total Annual Dividend Payments
by the total annual Net Income plus Noncash Expenses minus Noncash Sales.
Calculating the DPR for
one year provides a very unreliable indication only. A better approach
is to run a trend line on the ratio for several years to see if a
general pattern of decline or increase emerges.
This ratio is useful in projecting the
growth of company as well. Its inverse, the Retention Ratio (the
amount not paid out to shareholders in the form of dividends), can help
project a company’s growth.
Compare with the Dividend Payout Ratio:
Cash Flow from
Debt to Equity Ratio | CFROI |
Cash Value Added |
Cash Ratio |
Economic Value Added
More management models