MANAGEMENT

Detailed explanation-1: -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-2: -Profits may be distributed to shareholders in the form of dividends, or they may be reinvested or retained (within limits) by the corporation. Losses by the corporation are not claimed by individual shareholders.

Detailed explanation-3: -Dividends can be issued as cash payments, as shares of stock, or other property. So, we can say that a share of a company’s net profit distributed by the company to its stockholders is called dividend.

Detailed explanation-4: -Certain profits do not arise in the normal course of business as they are earned out of capital transactions. These profits are known as capital profits and are not available for distribution as Dividend.