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Dividend Coverage Ratio Formula

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Dividend Coverage Ratio measures the extent to which a company's earnings cover its dividend payments. Check FAQs

DCR = \frac{NI - PD}{CD}

DCR - Dividend Coverage Ratio?NI - Net Income?PD - Preferred Dividend?CD - Common Dividend?

Dividend Coverage Ratio Example

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Here is how the Dividend Coverage Ratio equation looks like with Values.

Here is how the Dividend Coverage Ratio equation looks like with Units.

Here is how the Dividend Coverage Ratio equation looks like.

12.125 = \frac{100000 - 3000}{8000}

12.125 = \frac{100000 - 3000}{8000}

12.125 = \frac{100000 - 3000}{8000}

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Dividend Coverage Ratio Solution

Follow our step by step solution on how to calculate Dividend Coverage Ratio?

FIRST Step Consider the formula

DCR = \frac{NI - PD}{CD}

Next Step Substitute values of Variables

∴

DCR = \frac{100000 - 3000}{8000}

Next Step Prepare to Evaluate

∴

DCR = \frac{100000 - 3000}{8000}

LAST Step Evaluate

∴

DCR = 12.125

Dividend Coverage Ratio Formula Elements

Variables

Dividend Coverage Ratio

Dividend Coverage Ratio measures the extent to which a company's earnings cover its dividend payments.

Symbol: DCR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Dividend Coverage Ratio

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.

Symbol: NI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Income

Preferred Dividend

Preferred Dividend are fixed dividend payments made to holders of preferred stock by a company.

Symbol: PD

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Preferred Dividend

Common Dividend

Common Dividend are periodic payments made by a company to its shareholders who hold common stock.

Symbol: CD

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Common Dividend

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FPI = \sqrt{LPI \cdot PPI}

How to Evaluate Dividend Coverage Ratio?

Dividend Coverage Ratio evaluator uses Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend to evaluate 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 evaluate Dividend Coverage Ratio using this online evaluator? To use this online evaluator for Dividend Coverage Ratio, enter Net Income (NI), Preferred Dividend (PD) & Common Dividend (CD) and hit the calculate button.

FAQs on Dividend Coverage Ratio

What is the formula to find Dividend Coverage Ratio?

The formula of Dividend Coverage Ratio is expressed as Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend. Here is an example- 2.425 = (100000-3000)/8000.

How to calculate Dividend Coverage Ratio?

With Net Income (NI), Preferred Dividend (PD) & Common Dividend (CD) we can find Dividend Coverage Ratio using the formula - Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend.

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Dividend Coverage Ratio Formula

Dividend Coverage Ratio Example

Dividend Coverage Ratio Solution

Dividend Coverage Ratio Formula Elements

Other formulas in Equity category

How to Evaluate Dividend Coverage Ratio?

FAQs on Dividend Coverage Ratio

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