Question

State differences between divisible profit and dividend.

Hint:

The dividend is paid out of divisible profit, which represents the profit available after necessary deductions.

Answer 1

The difference between divisible profit and dividend lies in their definitions and roles in the financial management of a company:

Divisible Profit:

Divisible profit refers to the portion of the net profit that is available for distribution among shareholders after accounting for reserves, taxation, and other deductions.
It is the amount left after all necessary provisions and expenses have been deducted from the company’s gross profit.

Dividend:

A dividend is the actual payment made to shareholders out of the divisible profit.
It is a part of the divisible profit that the company decides to distribute to its shareholders based on the number of shares they hold.


Conclusion: Divisible profit represents the total amount available for distribution, while the dividend is the portion actually distributed to shareholders.