Investment ratios - Dividend Cover | Ratio Analysis | A level Accounting 9706

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Welcome to our video on Dividend Cover, an important investment ratio from the Ratio Analysis chapter in Cambridge A Level Accounting. If you're diving into the world of financial analysis, this video is here to demystify the concept of dividend cover for you!

In this video, we'll explore what dividend cover is and why it matters in understanding a company's financial health. Dividend cover is a ratio that indicates how many times a company's net income can cover its ordinary dividend payments to shareholders.

Firstly, we'll define dividend cover and explain its significance. Dividend cover helps investors assess the sustainability of a company's dividend payments by comparing its earnings to the dividends paid out to shareholders.

Next, we'll delve into the components of dividend cover, focusing on ordinary dividends. Ordinary dividends are regular payments made by a company to its shareholders out of its profits.

Then, we'll discuss how to calculate dividend cover and interpret the results. By dividing the company's net income by its ordinary dividend payments, we can determine how many times the company's earnings cover its dividend obligations.

By the end of this video, you'll have a solid understanding of dividend cover and its importance in analyzing a company's financial performance. Get ready to sharpen your accounting skills and excel in your CAIE A Level Accounting studies!

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