OpenTuition | ACCA | CIMA
Free ACCA and CIMA on line courses | Free ACCA, CIMA, FIA Notes, Lectures, Tests and Forums
Spread the word
If you have benefited from our materials, please spread the word so more students can benefit.
To help us keep materials up to do and add new content you can also donate
July 31, 2019 at 7:05 pm
Apologies if I’m missing something obvious, but can you explain why dividend cover is being calculated as EPS instead of profit for the year / dividends?
July 31, 2019 at 7:31 pm
The dividend figure is given a a dividend per share, so we cannot use the total profit for the year to calculate the dividend cover and instead we must use the EPS (profit for the year divided by the number of shares in issue).
If you wanted to use the total profit figure you would have to use the total dividends, and so multiply the dividend per share by the number of shares in issue.
Hope that clears it up for you.
August 1, 2019 at 6:56 pm
Ah – that makes total sense, of course!
Thank you for your response.
You must be logged in to post a comment.