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QuestionsDividend payout ratio
Ang Henry asked 5 years ago

Hi i’ll like to seek your opinion of the above. It’s known that the payout ratio is based on the net profit(NP) of the coy. Is it ok to consider the ratio based on operating/free cash flow of the coy? I’m asking this based on the breadtalk case as the NP is affected by depreciation with much higher OCF however.

1 Answers
Victor Chng answered 5 years ago

Hi Henry,
 
You can still do that if you want but you have to minus the capex from OCF. Personally, I will still use net profit in order to be more conservative.

Ang Henry replied 5 years ago

How about the case of OCF lesser than NP, will that be a concern? Understand that might be caused by higher receivables?

Victor Chng replied 5 years ago

I think the OCF below NP is a concern when the percentage is less than 50% and it is happening almost every year.

Ang Henry replied 5 years ago

Ok Victor thanks for clearing my doubts.

Victor Chng replied 5 years ago

No problem Henry. :)