profitability-market

calculate_payout_ratio

Read-onlyIdempotent

Calculate the payout ratio: dividends per share divided by earnings per share — the share of profits distributed as dividends. Formula: Payout Ratio = Dividends Per Share / EPS. WHEN TO USE: Use to judge dividend sustainability: payout above 100% means dividends exceed earnings (funded by debt or reserves). WHEN NOT TO USE: Do NOT use when EPS is negative (ratio is meaningless), and note young growth companies legitimately pay little or nothing. BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero or non-finite inputs returns an explicit error instead of a number. RETURNS: JSON object { payout_ratio: decimal (e.g. 0.55 = 55%), payout_ratio_pct: number (e.g. 55.0), inputs }. PARAMETERS: dividends_per_share (required): Dividends per share in the period, e.g. 1.34. Must be >= 0. earnings_per_share (required): Earnings per share, e.g. 2.43. Must be > 0 for a meaningful ratio.

Input Schema

TableJSON Schema

Name	Required	Description	Default
`earnings_per_share`	Yes	Earnings per share, e.g. 2.43. Must be > 0 for a meaningful ratio.
`dividends_per_share`	Yes	Dividends per share in the period, e.g. 1.34. Must be >= 0.

TDQS

A4.7/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

The description clearly states the tool is a pure deterministic calculation with no side effects, no network or storage access, and is idempotent and non-destructive. It also discloses error behavior for division by zero or non-finite inputs, adding value beyond the annotations alone.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness5/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is organized into clear labeled sections: formula, when to use, when not to use, behaviour, returns, and parameters. Every sentence adds useful information, and no filler or redundant phrasing is present.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

Given no output schema, the description thoroughly explains the return JSON structure with example values. It covers safety, error behavior, input constraints, usage context, and exclusions, making the tool fully self-contained for an agent to invoke correctly.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters3/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the schema already fully documents both parameters. The description restates the parameter constraints but does not add significant new meaning beyond what the structured schema provides, so the baseline 3 is appropriate.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description uses a specific verb ('Calculate') with a clearly defined resource ('payout ratio') and gives the exact formula (Dividends Per Share / EPS). It is immediately distinguishable from the sibling ratio/margin calculators because it names its unique inputs and interpretation.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Explicit 'WHEN TO USE' and 'WHEN NOT TO USE' sections tell the agent to judge dividend sustainability and warn against using the tool when EPS is negative or for young growth companies. This is exactly the kind of decision guidance an agent needs.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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TDQS

A4.7/5.0

Disambiguation5/5

Each tool calculates a distinct financial metric with its own formula, inputs, and output. Even similarly named return-on-capital tools (ROA, ROE, ROCE, ROIC) are clearly differentiated by their denominators and described use cases.

Naming Consistency5/5

All 12 tools follow the exact same calculate_<metric_name> snake_case pattern. The verb is consistent and metric names map directly to the formulas, making the set highly predictable.

Tool Count5/5

Twelve tools is a well-scoped size for a financial ratio calculator covering profitability, return, valuation, and dividend metrics. Each tool addresses a distinct calculation and none feel redundant or unnecessary.

Completeness4/5

The tool surface covers core profitability margins, return ratios, EPS, dividend yield, payout ratio, P/E, and P/B. Minor gaps exist such as price-to-sales, EV/EBITDA, or EBITDA margin, but the primary domain of profitability and market valuation is well represented.

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