CAPEX Dividend Coverage Ratio
Calculate the dividend paid and capital expenditure coverage ratio, a solvency ratio that measures a company’s ability to cover both its capital expenditures and dividend payments with its cash flow from operations.
The capex dividend coverage ratio assesses whether a company’s cash flow from operations is sufficient to cover both its capital expenditures (which are essential for maintaining and growing its business) and its dividend payments to shareholders. A higher ratio indicates a stronger ability to fund both capex and dividends from operating cash flow.
The formula is as follows:
\[\text{Dividend Paid and Capital Expenditure Coverage Ratio} = \text{Cash Flow from Operations} / (\text{Capital Expenditure} + \text{Dividends Paid})\]Also known as: capex dividend coverage.
CAPEX Dividend Coverage Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_capex_dividend_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["XOM", "CVX", "COP"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_capex_dividend_coverage_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How well did the operating cash flow of ExxonMobil, Chevron and ConocoPhillips cover both their capital expenditure and their dividends from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| COP | 2.2122 | 1.7824 | 1.1862 | 1.2766 | 1.1963 |
| CVX | 1.5968 | 2.1621 | 1.3108 | 1.1148 | 1.1276 |
| XOM | 1.7826 | 2.303 | 1.5021 | 1.3417 | 1.14 |
Parameters
get_capex_dividend_coverage_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |