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Basic Question 1 of 2

Which is the most likely a warning sign of dividend sustainability?

A. Dividend coverage ratio: 2.5.
B. FCFE coverage ratio: 1.0.
C. Debt-equity-ratio: 20%.

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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

calculate and interpret dividend coverage ratios based on 1) net income and 2) free cash flow;

identify characteristics of companies that may not be able to sustain their cash dividend.

CFA® 2024 Level II Curriculum, Volume 3, Module 18.