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.
Characteristics of Warrants As mentioned earlier, a warrant is a variant of a call option and gives the holder a certain right to purchase shares of the company at a predetermi
how to calculate cost of equity
Treasury Inflation-Protected Securities (TIPS) are the inflation-indexed bonds, the US Treasury offers. The first offer was made in the year 1997. As the name sug
A cash-flow yield is the discount rate that makes the price of a mortgage-backed or asset-backed security equal to the present value of its ca
Purchasing and discounting of bills is the most important, from in which a bank lends without any collateral security. Present day commerce is build upon credit. The seller draws a
QUESTION (a) (i) Outline some capabilities of E-Trading. (ii) List three benefits of E-Trading. (b) (i) How can privacy be affected in E-Banking? (ii) Outline two meas
The production department in any firm is concerned with provision of production facilities, production cycle, skilled and unskilled labor, storage of finished goods, capacity utili
Payback Period It is an amount of time, mainly measured in years; it takes previously the undiscounted cash inflows from a project equal the cash outflow. It indicates the leng
Jack needs to borrow $1,000 for the next year. Bank South will give him the loan at 9 percent. Suncoast bank will give him the loan at 7 percent with a $50 loan origination fee. Fi
What is the Credit Policy? Describe please.
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: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd