Dividend cover

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Dividend cover, also commonly known as Dividend Coverage, is the ratio of company's earnings (net income) over the dividend paid to shareholders, calculated as net profit or loss attributable to ordinary shareholders by total ordinary dividend [1] So, if a company has net profit after tax of 2400 divided by total ordinary dividend of 1000, then dividend cover is 2.4. The dividend cover formula is the inverse of the dividend payout ratio.

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