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When we calculated the div. cover using Earnings/Total dividends. We established that dividends attributable to preference shares are regarded as Interests and deducted from Total Earnings
34000-2800/20000 = 1.56times.
When we took of the pref. div of 2800, why didn’t we adjust the total div of 20000 if we transferred 2800 from it to earnings.
I don’t know where you are quoting these numbers from 🙂
However, dividend cover is calculated as the earnings per share (the earning are the profits available for ordinary shareholders i.e. profit less preference dividends) divided by the dividend per share to ordinary shareholders.
Because I cannot see whatever question you are referring to, I don’t know what the 20,000 is (it should be the dividend to ordinary shareholders).
As regards transferring 2800 to earnings – that doesn’t make sense if you are referring to the 2800 paid as preference dividend!
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