by Divisible profit refers to the portion of a company’s profit that is available for distribution as dividends to its shareholders after accounting for all expenses, taxes, and other obligations. The amount of divisible profit is determined by the company’s financial performance and its management’s decision on how much of the profit to retain for future investments and how much to distribute as dividends to shareholders.
Dividend, on the other hand, is the portion of a company’s profits that is distributed to its shareholders as a reward for their investment in the company. Dividends are typically paid in the form of cash, although they can also be paid in the form of additional shares of the company’s stock. Dividends are usually paid on a regular basis, such as quarterly or annually, and the amount of the dividend can vary depending on the company’s financial performance and management’s decision on how much to distribute.
The decision to pay dividends and the amount of the dividend are typically made by the company’s board of directors. Factors that may influence this decision include the company’s financial performance, its future growth prospects, and the needs and expectations of its shareholders. Some companies may choose to pay a higher dividend to attract more investors, while others may retain more of their profits to invest in future growth opportunities.
Divisible Profit and Dividend Provisions and Components
Divisible profit is the portion of a company’s profit that is available for distribution as dividends to its shareholders after accounting for all expenses, taxes, and other obligations. The amount of divisible profit is calculated based on the company’s net profit for the financial year, after deducting all expenses and taxes.
Dividend provisions are the rules and regulations governing the payment of dividends by a company. These provisions can be set out in the company’s articles of association or bylaws, and they typically cover issues such as the timing and frequency of dividend payments, the calculation of dividend amounts, and any restrictions or limitations on the payment of dividends.
The components of dividend provisions may include:
- Dividend policy: This sets out the company’s policy on how much of its profits it intends to distribute as dividends, and how often it plans to pay dividends.
- Dividend formula: This outlines the method by which the dividend amount is calculated, such as a percentage of the company’s net profit or a fixed amount per share.
- Dividend declaration date: This is the date on which the company’s board of directors announces the dividend payment, and it usually follows the release of the company’s financial results.
- Dividend ex-date: This is the date on which the shares begin trading without the right to receive the upcoming dividend payment.
- Dividend record date: This is the date on which the company determines which shareholders are entitled to receive the upcoming dividend payment.
- Dividend payment date: This is the date on which the company pays out the dividend to its shareholders.
- Restrictions or limitations: These may include conditions or restrictions on the payment of dividends, such as minimum capital requirements or restrictions on the distribution of profits in certain jurisdictions.
