What Is The Difference Between Dividend And Interim Dividend?

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What Is The Difference Between Dividend And Interim Dividend?

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Answer 1

What is the difference between Interim Dividend and Final Dividend?

INTERIM DIVIDENDS:

Interim Dividends are declared and distributed before the company’s annual earnings have been known.

These interim dividends are paid out of undistributed profits (reserves) brought from previous periods.

A company may choose to pay interim dividend quarterly or half yearly as long as it has adequate undistributed profits brought forward from previous periods.

These dividends usually accompanies the company’s interim financial statements

FINAL DIVIDENDS:
Final dividends are declared at the end of the financial period whereby the directors are aware of the companyâ€™s profitability and financial health.

Normally, final dividends are declared before the books are closed and will be paid the following year. Thus final dividends will appears as dividend payable or proposed dividends under current liabilities in the Balance Sheet of that period.

Normally, compared to interim dividends, the final dividends % constitute the largest payout.

Answer 2

A dividend is the share of the profits of a company. The shareholders make investment in shares. The return on investment in share is called dividend. It is the part of profit earned by the company. The directors can purpose the rate of dividend. The shareholders can approve it in the annual general meeting. The rate of dividend can not be raised by shareholders. A successful business can earn sufficient profit to pay dividend. There is a need of professional management. The division of labor is possible more over there is demand of reasonable amount of capital. The best capital structure is an ambition of every business management.

The word interim means in the mean time, dividend paid during the year is called interim dividend. The company management can pay dividend to shareholders during the year in order to develop the confidence of members. The directors should prepare the account for the making decisions about interim dividend. The management can prepare interim account. There may be reasonable profit. There may be good expectation for the coming period. In case of sufficient cash the management has the right to declare and pay dividend.