Google PageRank 

Google PageRank is a number that indicates how important a page is.

Google PageRank is a number between 0 and 10 and is determined by the number and quality of links to a page.

Google PageRank is calculated by interpreting a link from page A to page B as a vote by page A for page B. Links from any  internal or external page to your page are backlinks. Votes cast by more important pages improve your Google PageRank.

Google filters out links from known link farms. You cannot increase your Google PageRank with links form a link farm. But, on the positive side, no incoming link  will ever decrease your PageRank. You cannot control who links to you so cannot be penalised for dodgy incoming links.

Google PageRank can be adversely affected by dodgy outgoing links. You control them, you should pay for them. If it has a page rank of zero try to avoid linking to it as that often results in a penalty.

Google PageRank can be estimated by using the following formula

PR(A) = 0.15 + 0.85(PR(t1)/C(t1)+...+PR(tn)/C(tn))

t1 - tn = pages linking to A
C(tx) = number of outbound links from page tx.

The PageRank is probably logarithmic, but only the Google Guys know for sure what its parameters are.

If a website links out to other websites, the PR of that page leaks out  and gives them an additional boost in their PR rankings. The more websites linked to, the more PR that is leaked. Homepage PR will also leak out to internal pages.

In linking to an external page there is no loss in PageRank, but the PageRank passed is lower. Linking to two pages will mean a lower PageRank is passed to both pages than if only one had been linked to. 

If I you have a page with a link to your home page and some outgoing links, your home page will get less PR than if there were no outgoing links. Therefore be choosy about outgoing links.