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(Querist)
30 November 2009 Under the common sense approach to dividend model, if the company is in its growth stage and R>K (return on investment > cost of equity), why the payout ratio should be 0%? If the company's return on investment is greater than cost of equity,why the company is not paying dividend to its shareholders?
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Anjani Pratap Tiwari

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Anjani Pratap Tiwari (Expert)
01 December 2009 As the company is in its growth stage it requires funds for expanding its activities , the return on equity is kept for that requirement that's why in this model dividend payout is zero.
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Abinaya Selvam

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Abinaya Selvam (Querist)
01 December 2009 Thanks sir, then if its in decline stage, at this point R
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