Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Dividend cover
Dividend cover measures the relationship among earnings per share and net dividends per share. The higher the altitude of dividends for any given level of EPS the lower will be the level of profit retained and re-invested within the business. This is able to have an effect on the balance of returns available to an equity investor.
The returns from spending in shares may take the form of either income that is dividends which are paid twice yearly or capital gain/loss which is earned when the shares are sold. A few investors may prefer one type of return to the other often for tax reasons.
Dividend cover is measured as follow Earnings per share (net)/dividend per share (net). Using the instance of Zellus plc the net EPS is 18 cents. The gross dividend is nine cents and thus if tax is payable at 20% then the net dividend equals 7.2 cents. Using the formula dividend cover equivalents 18/7.2 which provides a dividend cover of 2.5.
In other prose Zellus' earnings are sufficient for the company to be able to pay out dividends at a rate 2.5 times their current stage. By contrast Buntam has an EPS of eight cents and a net dividend per share of 6.4 cents giving a dividend cover of just 1.25.
Investors need to understand the relationship between dividend cover and investment returns. As a universal rule the greater the level of retention and dividend cover the greater the likelihood that a share will yield capital gain rather than income. From the instance given above it would thus appear for Buntam plc paying out almost all their earnings as dividends there is limited scope for capital growth in the share price. By contrast Zellus has a comparatively high dividend cover and so the reinvestment of profits should generate capital gains. As with every investor ratios dividend cover has to be interpreted with caution and alongside a number of other measures.
Buying and Selling Securities One of the key features that may occur while investing in financial markets is that sometimes investors overlook the essential factors they should c
Why the term objective is used for The term is used in a rather narrow sense of what a firm must attempt to achieve with its financing, investment and dividend policy decisions
the approach focussed mainly on the financial problems of a corporate enterprise
Question: a. Explain what the debt overhang problem is (following the lines of Myers 1977) make sure that you specify what the relevant conflict of interest is and what are the
Profit Center A separate unit or department within an organization that is responsible for its own revenues, costs, and there profit. Profit center managers are commonly free t
undertake a critical review of the current academic literature to determine the reasons for benefits of and the costs to companies of cross listing.
QUESTION a) Discuss the importance of diversification in the context of stock markets using appropriate numerical illustrations. b) Mimine and Minush are two companies with
Q. What is ABC Analysis? ABC Analysis: - ABC Analysis is a method of controlling different items of inventory. Generally a firm has to maintain several different items as inven
the salaries paid in 2004 is rs 500000 outstanding is rs 20000 salaries paid in advance for 2004 is rs 30000 what is the actual salary expenditure for 2004 which accounting princip
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd