Xenophon Limited has dividends per share for the financial year of 20 pence, 200,000 ordinary shares with a par value of £1 each, 100,000 preference shares of £1 each with a dividend rate of 10%, profits before taxation for the year of £300,000 and a taxation charge for the year of £50,000. What is Xenophon Limited's dividend cover?

Question

Quizplus · Accepted Answer

Dividend cover = (Earnings per share) / (Dividend per share)Earnings per share = (Profit before tax - Preference dividend) / Number of ordinary sharesPreference dividend = Preference share capital * Preference dividend rate= (100,000 * 1 * 10%)= £10,000Earnings per share = (300,000 - 10,000) / 200,000= £1.45Dividend cover = 1.45 / 0.20= 7.25 times

Xenophon Limited Has Dividends Per Share for the Financial Year