| Before we dig into the numbers, though, it's important to remember that when we evaluate BDCs, our parameters are slightly different from the ones we use for normal stocks. The biggest difference is that we look at net investment income (NII) instead of free cash flow. Net investment income is the amount of money a company makes from its investments, while free cash flow is the amount of money a company has left over after paying its expenses. We use NII for BDCs because they are purely in the business of investing in other companies, so we need to know whether their investments are actually paying off and growing. The second major difference is that when we evaluate a BDC, our threshold for the company's payout ratio is 100% instead of the usual 75%. We give BDCs this extra leeway because they, like real estate investment trusts (REITs), are required to pay out 90% of their income to investors. Now that we've established those differences, let's see how Ares Capital stacks up. Our first step is to look at the company's NII. And I must say, it's looking pretty good. From 2020 to last year, Ares saw 60% growth in its NII. And Wall Street analysts expect NII to jump from $1.27 billion last year to $1.45 billion this year, an additional 16.5% increase. So clearly, the company's cash flow growth is strong... But we still must consider the all-important payout ratio and the actual dividends paid out to investors. | 
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