- CFA Exams
- CFA Level I Exam
- Topic 4. Corporate Issuers
- Learning Module 18. Analysis of Dividends and Share Repurchases
- Subject 8. Analysis of Dividend Safety
CFA Practice Question
Which is the most likely a warning sign of dividend insustainability?
A. Dividend coverage ratio: 2.5.
B. FCFE coverage ratio: 2.5.
C. Debt-equity-ratio: 80%.
Explanation: As a general rule of thumb, a company's debt to equity ratio should NOT exceed 50%.
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