Show pageOld revisionsBacklinksBack to top This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong. ======Payout Rule====== The Payout Rule is a framework, popularized by Columbia Business School professor and value investor [[Bruce Greenwald]], used to estimate a company's sustainable growth rate. It’s a powerful mental model that helps investors understand the direct link between a company's profitability and its ability to grow. The rule states that a company's sustainable growth is a product of its [[Reinvestment Rate]] and its [[Return on New Invested Capital (RONIC)]]. In essence, a company can only grow as fast as it can profitably reinvest its earnings back into the business. This simple concept cuts through the noise of "growth" stories, forcing an investor to focus on the economic reality of a business. It's not just about getting bigger; it's about getting bigger //profitably//. For value investors, this rule is a critical tool for assessing management's [[capital allocation]] skills and determining whether a company is creating or destroying shareholder value over the long term. ===== The Core