Dividend/FCF = Dividend/Free Cash Flow
Dividend/FCF shows the proportion of free cash flow that goes to dividends.
The key figure shows whether the company's free cash flow is able to finance the dividends.
Things to keep in mind
- A value less than 100% shows that the dividend is lower than the free cash flow.
- A value greater than 100% shows that the dividend is greater than the free cash flow and the company must be financed in a different way, such as through loans or cash.