Cash Dividend Coverage Ratio

Cash Dividend Coverage Ratio

Formula to calculate cash dividend coverage ratio:

Cash Dividend Coverage = (cash flow from operations) / dividends.



Cash dividend coverage ratio definition and explanation:

The cash dividend coverage ratio reflects the company's ability to meet dividends from operating cash flow.



A cash dividend coverage ratio of less than 1:1 (100 %) indicates that dividends are draining more cash from the business than it is generating.

The cash dividend coverage ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.