Question

Distinguish between: Final Dividend and Interim Dividend

Hint:

{Final} dividend is for the {Full} year, approved by {Folks} (shareholders) at the end. {Interim} is an {In-between} payment, decided by the {Insiders} (Board).

Answer 1

The main difference relates to the timing and the declaring authority. A final dividend is declared at the end of a financial year by the shareholders in an AGM, whereas an interim dividend is declared in the middle of a financial year by the Board of Directors.

Basis of Distinction	Final Dividend	Interim Dividend
Meaning	A dividend declared and paid after the close of the financial year and finalization of accounts.	A dividend declared and paid between two Annual General Meetings (i.e., during the financial year).
Declaring Authority	It is recommended by the Board of Directors and declared by the shareholders at the AGM.	It is both declared and paid by the Board of Directors in a Board Meeting.
Timing	Declared at the Annual General Meeting.	Declared anytime during the financial year.
Source of Profits	Paid out of the profits of the financial year after preparing the final accounts.	Paid out of the profits of the current year before the final accounts are prepared.
Rate	The rate of final dividend is usually higher than the interim dividend.	The rate is generally lower as it is based on estimated profits.