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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 am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.