The times preferred dividends earned measures a company's ability to meet its preferred dividend payments to shareholders. This financial ratio only requires two inputs, net income and the company's annual preferred dividends paid, both of which can be found on the company's income statement.
Times Preferred Dividends Earned = Net Income / Preferred Dividends
Also known as preferred dividends coverage, times preferred dividends earned is the primary measure of safety for a preferred stockholder. Holders of common stock are also interested in this measure, since dividends are usually paid to holders of preferred stock before common stockholders.
Preferred stockholders usually purchase these securities because they are interested in the yield on their investment. Times preferred dividends earned allows these stockholders to understand how much net income is available relative to the required preferred dividends paid.
As a general rule, investors would like to see the times preferred dividends earned value to be as high as possible. When drawing conclusions about the relative performance of a company, benchmark comparisons should be made with competitors in the same industry.
Company A's income statement indicates net income of $4,283,000 and preferred dividends of $306,000. Company A's times preferred dividends earned would be:
= $4,283,000 / $306,000, or 14.0
leverage ratio, liquidity ratios, debt ratio
Explore Investing Further
Trading has never been easier, thanks to the rise of online platforms that enable you to buy and sell various assets at the click of a button. But with so many options available, it can be challenging to decide which platform is right for you.
Looking for a way to avoid swap fees while trading forex?
Below listed are the small reviews of the top 10 ETF brokers available across the United States.
Our top beginner's pick for copy trading is eToro. Read on for more details, plus seven good alternatives.
Swing trading stocks can be a great way for investors to take advantage of short-term stock market movements and gain significant returns. If you're interested in swing trading, the key to success lies in selecting the right stocks to buy and sell quickly for a profit.
The table below lists the best stock picks under $2, listed on public exchanges.
The table below lists the best stock picks under $1, listed both on public and OTC exchanges.
This section will highlight the best EV-trading penny stocks available in the United States.
The demand for sustainable energy has grown rapidly in recent years. This has resulted in increased scrutiny of the automotive market. As a result, the electric vehicle (EV) industry has made significant advancements.
Intelligent Bio Solutions Inc. is a life sciences company, founded in 2016 with headquarters in New York and is engaged in performing diagnostic tests, real-time monitoring, and non-invasive surgery for its patients. The firm has developed a CoV-2 Biosensor, which can be used in RNA virus detection.
Hour Loop was founded in 2013 with headquarters in Redmond, Washington. It’s an online retailer involved in e-commerce in the United States that hit the public markets on Jan 7th of 2022. The company sells home/garden decor, electronic products, kitchenware, and apparel through walmart.com, amazon.com, and hourloop.com.