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

1. ↑ Fundamentals of Auditing
2. ↑ Profit versus divisible profit

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