Dividend refers to the amount of return on shares held by an investor. It is paid from the PAT and is decided by the BOD. It can be paid from current earnings or past earning (which has been kept as reserves).
Category: Dictionary
Definition of Financial statement
A financial statement is a summarized report of a company’s financial activities over a period of time. Financial statements are meant to provide financial information of a company. Financial statements are composition of mainly three statements. These are Balance sheet, Income statement (P&L Account) and Cash flow statement.
Fixed liabilities – Meaning
Fixed liabilities are those long term liabilities which a company has to pay after more than one year. It simply means that these liabilities become due for a business enterprise after one year.
The total figure of these liabilities is used to check the dependency of a firm over its long terms debt instruments. For this purpose, it is used in ‘Debt to equity ratio’, which indicates balance between equity and debt used by a firm to raise funds.
These liabilities are shown on the liability side on a balance sheet.
List of fixed liabilities:
- Debenture
- Bonds
- Mortgages
- Pension obligations
- Lease obligations
- Loans and advances from subsidiaries
- Loans and advances from banks
- Other long term loans and advances.
Definition of Issued share capital
Issued share capital is that part of authorized share capital which has been issued by the company for subscription. Generally a company does not issue all of its authorized capital and keeps a part of it reserved. This is done so that the company can raise funds in future also by issuing the remaining part of its authorized capital. The part which has not been issued by the company is known as unissued share capital.
Example of issued share capital:
Lets assume that ABC ltd. got registered with a capital of INR 1,00,00,000 (1 crore) divided into shares of INR 10 each. The management decides to issue 8,00,000 (8 lakh) shares to raise a fund of INR 80,00,000 (80 lakh) but the investors subscribe for only 6,00,000 (6 lakh) shares. Now the company calls for only INR 4 per share out of INR 10 (Nominal value of shares) and it gets full amount for only 5,50,000 (5 lakh 50 thousand) shares.
Then
Issued share capital = Rs 80 lakh (8 lakh shares of Rs 10 each)
From the figures given above it is clear that the amount of issued share capital for company ABC Ltd is Rs 80 lakh.
Definition of Liability
An obligation to pay a debt is called liability. Liabilities are recorded on the left hand side on a balance sheet.
On the basis of time period liabilities can be divided into two categories- current liabilities and fixed liabilities.