Which one of the following statements is correct? Dividend cover is calculated as:
A)Dividends as a percentage of share capital.
B)Profit after taxation divided by dividends.
C)Operating profit divided by dividends.
D)Dividends as a percentage of shareholders' equity.

Question

Quizplus · Accepted Answer

Dividend cover is a measure of a company's ability to pay dividends to its shareholders. It is calculated by dividing the company's profit after taxation by the dividends paid to shareholders. This measure shows how many times the company's profits can cover the dividends it pays out. Therefore, the correct option is B.

Which One of the Following Statements Is Correct? Dividend Cover