GENERAL KNOWLEDGE

Detailed explanation-1: -According to the generally accepted definition, “dividend” means the profit of a company, which is not retained in the business and is distributed among the shareholders in proportion to the amount paid-up on the shares held by them.

Detailed explanation-2: -A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings).

Detailed explanation-3: -The dividend payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage.

Detailed explanation-4: -Profit or a portion of profit that can be legally distributed as a dividend to the shareholders is known as Divisible Profit. All profit of the company is not divisible and number of factors should be considered while determining divisible profit of the company.

Detailed explanation-5: -Dividend is usually a part of the profit that the company shares with its shareholders. Description: After paying its creditors, a company can use part or whole of the residual profits to reward its shareholders as dividends.