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Basic Question 1 of 2
Which is the most likely a warning sign of dividend sustainability?
B. FCFE coverage ratio: 1.0.
C. Debt-equity-ratio: 20%.
A. Dividend coverage ratio: 2.5.
B. FCFE coverage ratio: 1.0.
C. Debt-equity-ratio: 20%.
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
calculate and interpret dividend coverage ratios based on 1) net income and 2) free cash flow;
identify characteristics of companies that may not be able to sustain their cash dividend.
CFA® 2025 Level II Curriculum, Volume 3, Module 16.