I understand from Schweser’s Note that:
Dividends declared refers to total dividends on a firm-wide basis.
Question: Does dividends declared refer to common dividends only? Or it refer to both common and preferred dividends. (Assumption: Firm capital structure include both preferred and common equity)
Although it refers to both, I’ve never seen CFA Institute ask a question in which they had preferred dividends declared.
So whenever I’m asked to compute rentention rate (" RR"):
RR= 1- (dividends declared)/(net income available to common);
the dividends declared will be the dividends for both common and preferred shareholders?
Once again, in theory it should include all dividends – common and preferred – but I’ve never seen CFA Institute include preferred dividends in a question on retention ratio or payout ratio.