Multiple choice

Dividend coverage measures the ability of a firm

  1. to pay dividend on preference shares.

  2. to pay long term loan.

  3. to pay current liability.

  4. to pay income tax.
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A Correct answer
Explanation

Preference Shares carry a stated Rate of Return. In ratio analysis, it measures the ability of the company, to pay dividend on preference shares, which is very critical for a company.

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