Dividend coverage ratio (DCR), or dividend cover, is a financial ratio which tells how many times a company is able to pay dividends to its shareholders with net income. The formula for calculating the dividend coverage ratio is as follows:

Dividend Coverage Ratio = Net Income / Dividend Declared

This formula can be modified to calculate the DCR for common shareholders:

DCR = (Net Income - Required Preferred Dividend Payments) / Dividends Declared to Common Shareholders

Moreover, the following formula measures the number of times a company is able to pay dividends to preferred shareholders:

DCF = Net income / Dividends Declared to Preferred Shareholders

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