# Dividend Safety Score

`D18-F09-A07` · Fundamental Analysis and Valuation → Integrated Equity Scoring · archetype `record-transform` · difficulty 3/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/fundamental-analysis-and-valuation/integrated-equity-scoring/dividend-safety-score/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { dividendSafetyScore } from "fintech-algorithms/fundamental-analysis-and-valuation/integrated-equity-scoring/dividend-safety-score";
```

## Signature

```ts
dividendSafetyScore(data)
```

Scores dividend safety from four capped ratios — free cash flow and net income each against twice the dividend, interest coverage against ten times, and cash against four times the dividend — blended into one weighted score.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `data` | `{ free_cash_flow: number; dividends_paid: number; net_income: number; interest_coverage: number; cash_and_equivalents: number }` | yes | `dividends_paid` is the denominator of the coverage ratios and must be positive. `free_cash_flow` and `net_income` are finite and may be negative; `interest_coverage` and `cash_and_equivalents` must not be negative. |

## Returns

`{ state: string; method: string; components: { free_cash_flow_coverage: number; earnings_coverage: number; interest_coverage: number; cash_buffer: number }; weights: Record<string, number>; contributions: Record<string, number>; dividend_safety_score: number; band: string; coverage_policy: string }`

`components` holds the four ratios each clamped to 0 to 100, `weights` gives 0.35 to `free_cash_flow_coverage`, 0.25 to `earnings_coverage` and 0.2 each to `interest_coverage` and `cash_buffer`, `contributions` is each component times its weight, and `dividend_safety_score` is their sum. `band` is `strong` at 75 or above, `watch` at 50 or above, otherwise `weak`.

## Errors

- When any of free_cash_flow, dividends_paid, net_income, interest_coverage or cash_and_equivalents is not a finite number — throws TypeError
- When dividends_paid is not positive — throws RangeError
- When interest_coverage or cash_and_equivalents is negative — throws RangeError

## Complexity

Time `O(1)`, space `O(1)`.

## Worked example

Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

### Input

`data`:

```json
{
  "free_cash_flow": 180,
  "dividends_paid": 60,
  "net_income": 150,
  "interest_coverage": 6,
  "cash_and_equivalents": 180
}
```

### Call

```ts
dividendSafetyScore(data)
```

### Returns

object with 8 fields: state, method, components, weights, contributions, dividend_safety_score, band, coverage_policy

```json
{
  "state": "calculated",
  "method": "coverage-and-liquidity-dividend-safety",
  "components": {
    "free_cash_flow_coverage": 100,
    "earnings_coverage": 100,
    "interest_coverage": 60,
    "cash_buffer": 75
  },
  "weights": {
    "free_cash_flow_coverage": 0.35,
    "earnings_coverage": 0.25,
    "interest_coverage": 0.2,
    "cash_buffer": 0.2
  },
  "contributions": {
    "free_cash_flow_coverage": 35,
    "earnings_coverage": 25,
    "interest_coverage": 12,
    "cash_buffer": 15
  },
  "dividend_safety_score": 87,
  "band": "strong",
  "coverage_policy": "coverage is capped at two times and cash buffer at four times"
}
```

## Other exports

`calculate`, `pointInTimeStockScoringInputAssembly`, `stockScoringPeerCohortResolver`, `fundamentalMetricDirectionAndPeerNormalization`, `modelApplicabilityAndVariantRouter`, `accountingFinancialHealthComposite`, `earningsQualityComposite`, `balanceSheetResilienceScore`, `distressModelEnsemble`, `crossModelConflictAndDoubleCountingResolver`, `overallExplainableStockScore`, `scoreConfidenceMissingDataPenaltyAndAbstention`, `marketWideStockScreeningAndRanking`, `stockScoreHistoryMigrationAndChangeAttribution`. Every module additionally exports `run` as an alias of its primary
function, and a `meta` object carrying its catalog id, domain, family, shape and article URL.

## Verification and provenance

Tier: **verified** (via D).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.0.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/fundamental-analysis-and-valuation/integrated-equity-scoring/dividend-safety-score/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/fundamental-analysis-and-valuation/integrated-equity-scoring/dividend-safety-score/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/fundamental-analysis-and-valuation/llms.txt