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Equity Dividend Cover ratio/meaning/formula.

Equity Dividend Cover: this is the ratio that gives information about net profit available to equity shareholders. This ratio expresses profit as a number of times of equity dividend payable.

This ratio is calculated using the following formula:

(Net Profit After Tax – Preference Dividend) / Equity Dividend

The higher the equity dividend cover, the greater the certainty that dividends will be paid in the future.

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