Paura and Fear plc is a listed company.Extracts from its financial statements for the year ended 31 December 20X2 are as follows: During the year the company paid a dividend of £4 000 000 to its shareholders.
What was the company's dividend cover for the year ended 31 December 20X2 (to two decimal places)?

Question

Paura and Fear plc is a listed company.Extracts from its financial statements for the year ended 31 December 20X2 are as follows:  During the year the company paid a dividend of £4 000 000 to its shareholders.
What was the company's dividend cover for the year ended 31 December 20X2 (to two decimal places)?

Quizplus · Accepted Answer

Dividend cover is calculated by dividing the profit after tax by the total amount of dividends paid. From the financial statements, the profit after tax for the year is £8,160,000, and the dividends paid is £4,000,000. Therefore, the dividend cover can be calculated as follows:

Dividend cover = profit after tax / dividends paid
Dividend cover = £8,160,000 / £4,000,000
Dividend cover = 2.04 (rounded to two decimal places)

Therefore, the correct answer is B) 2.03.

Paura and Fear Plc Is a Listed Company