Divisible Profit

Profit or a portion of profit that can be legally distributed as a dividend to the shareholders is known as Divisible Profit.^[1] All profit of the company is not divisible and number of factors should be considered while determining divisible profit of the company.^[2]

Factors influencing the value of Divisible Profit

Following are some factors that influence the value of divisible profit.

• Transfer to and Creation of reserve
• Creation of Dividend Equalization Reserve
• Working Capital Requirement of the company
• Dividend on Preference Share
• Past Dividend Payout History

References

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