Cash dividend coverage ratio is a financial metric that assesses a company's ability to cover its dividend payments using cash generated from its operating activities.

Cash dividend coverage ratio = Cash from operating activities / Common dividends paid

By using this formula, investors can gauge the sustainability of a company's dividend payments and assess its ability to maintain or potentially increase dividends in the future.

This ratio helps investors evaluate whether a company has enough cash flow from its operations to sustain its dividend payments. A ratio greater than 1 indicates that the company generates sufficient cash flow to cover its dividend obligations. Conversely, a ratio less than 1 suggests that the company may be using other sources of cash, such as debt or cash reserves, to pay dividends.