Dividend Coverage Ratio Calculator

✖Net Income is a key financial metric that represents the total earnings of a company after deducting all expenses, taxes, interest, and other costs from its total revenue.ⓘ Net Income [NI]			+10% -10%
✖Preferred Dividend are fixed dividend payments made to holders of preferred stock by a company.ⓘ Preferred Dividend [PD]			+10% -10%
✖Common Dividend are periodic payments made by a company to its shareholders who hold common stock.ⓘ Common Dividend [CD]			+10% -10%

✖Dividend Coverage Ratio measures the extent to which a company's earnings cover its dividend payments.ⓘ Dividend Coverage Ratio [DCR]

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Formula

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Dividend Coverage Ratio

Formula

`"DCR" = ("NI"-"PD")/"CD"`

Example

`"12.125"=("100000"-"3000")/"8000"`

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Dividend Coverage Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend
DCR = (NI-PD)/CD
This formula uses 4 Variables

Variables Used

Dividend Coverage Ratio - Dividend Coverage Ratio measures the extent to which a company's earnings cover its dividend payments.
Net Income - Net Income is a key financial metric that represents the total earnings of a company after deducting all expenses, taxes, interest, and other costs from its total revenue.
Preferred Dividend - Preferred Dividend are fixed dividend payments made to holders of preferred stock by a company.
Common Dividend - Common Dividend are periodic payments made by a company to its shareholders who hold common stock.

STEP 1: Convert Input(s) to Base Unit

Net Income: 100000 --> No Conversion Required
Preferred Dividend: 3000 --> No Conversion Required
Common Dividend: 8000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

DCR = (NI-PD)/CD --> (100000-3000)/8000

Evaluating ... ...

DCR = 12.125

STEP 3: Convert Result to Output's Unit

12.125 --> No Conversion Required

FINAL ANSWER

12.125 <-- Dividend Coverage Ratio

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Kashish Arora

Satyawati College (DU), New Delhi

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Dividend Coverage Ratio Formula

Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend
DCR = (NI-PD)/CD

What is Dividend Coverage Ratio?

The Dividend Coverage Ratio is an essential tool for investors, as it helps them assess the sustainability and reliability of a company's dividend payments. A high ratio indicates that the company has sufficient earnings to sustain its dividend policy, providing confidence to investors that dividends are likely to be maintained or even increased in the future. Conversely, a low ratio may raise concerns among investors about the company's ability to maintain its dividend payments, potentially leading to a decline in investor confidence and share price.
To calculate the Dividend Coverage Ratio, one typically divides the company's net income by the total dividends paid to shareholders over a specific period. The resulting ratio provides insight into the company's dividend-paying capacity. A ratio greater than 1 indicates that the company's earnings are adequate to cover its dividend payments, while a ratio less than 1 suggests that the company may be using more than its earnings to fund dividends.

How to Calculate Dividend Coverage Ratio?

Dividend Coverage Ratio calculator uses Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend to calculate the Dividend Coverage Ratio, The Dividend Coverage Ratio is a financial metric used to assess a company's ability to pay dividends to its shareholders from its earnings. Dividend Coverage Ratio is denoted by DCR symbol.

How to calculate Dividend Coverage Ratio using this online calculator? To use this online calculator for Dividend Coverage Ratio, enter Net Income (NI), Preferred Dividend (PD) & Common Dividend (CD) and hit the calculate button. Here is how the Dividend Coverage Ratio calculation can be explained with given input values -> 2.425 = (100000-3000)/8000.

FAQ

What is Dividend Coverage Ratio?

The Dividend Coverage Ratio is a financial metric used to assess a company's ability to pay dividends to its shareholders from its earnings and is represented as DCR = (NI-PD)/CD or Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend. Net Income is a key financial metric that represents the total earnings of a company after deducting all expenses, taxes, interest, and other costs from its total revenue, Preferred Dividend are fixed dividend payments made to holders of preferred stock by a company & Common Dividend are periodic payments made by a company to its shareholders who hold common stock.

How to calculate Dividend Coverage Ratio?

The Dividend Coverage Ratio is a financial metric used to assess a company's ability to pay dividends to its shareholders from its earnings is calculated using Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend. To calculate Dividend Coverage Ratio, you need Net Income (NI), Preferred Dividend (PD) & Common Dividend (CD). With our tool, you need to enter the respective value for Net Income, Preferred Dividend & Common Dividend and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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