- CFA Exams
- CFA Level I Exam
- Study Session 7. Corporate Finance (1)
- Reading 21. Analysis of Dividends and Share Repurchases
- Subject 4. 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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