nterim Dividend Explained

Individuals invest in companies through bonds or stocks. Bonds pay a set rate of
interest, and investors have seniority over shareholders in the case of
bankruptcy, but investors do not benefit from share price appreciation. Stocks do
not pay interest, but some do pay dividends. Dividend payments allow
shareholders to benefit from earnings growth through both interim and final
dividends as well as share price appreciation. Directors declare an interim
dividend, but it is subject to shareholder approval. By contrast, a
normal dividend, also called a final dividend, is voted on and approved at the
annual general meeting once earnings are known. Both interim
and final dividends can be paid out in cash and stock.

KEY TAKEAWAYS

 An interim dividend is a dividend payment made before a company's

annual general meeting and the release of final financial statements.
 The interim dividend is issued more frequently in the United
Kingdom, where dividends are often paid semi-annually.
 Directors declare an interim dividend, but it is subject to shareholder
approval.
What Is a Deferred Tax Asset?
A deferred tax asset is an asset on a company's balance sheet that may be used
to reduce its taxable income. It can refer to a situation where a business has
overpaid taxes or taxes paid in advance on its balance sheet. These taxes are
eventually returned to the business in the form of tax relief, and the over-payment
is, therefore, an asset for the company.

Breaking Down Deferred Tax Asset

Deferred tax assets are often created due to taxes paid or carried forward but not
yet recognized in the income statement. For example, deferred tax assets can be
created due to the tax authorities recognizing revenue or expenses at different
times than that of an accounting standard. This asset helps in reducing the
company’s future tax liability. It is important to note that a deferred tax asset is
recognized only when the difference between the loss-value or depreciation of
the asset is expected to offset future profit.

A deferred tax asset can conceptually be compared to rent paid in advance or

refundable insurance premiums; while the business no longer has cash on hand,
it does have comparable value, and this must be reflected in its financial
statements.

A deferred tax asset is the opposite of a deferred tax liability, which can increase
the amount of income tax owed by a company.
What Is a Deferred Tax Liability?
A deferred tax liability is a tax that is assessed or is due for the current period but
has not yet been paid. The deferral comes from the difference in timing between
when the tax is accrued and when the tax is paid. A deferred tax liability records
the fact the company will, in the future, pay more income tax because of a
transaction that took place during the current period, such as an installment
sale receivable.

Breaking Down Deferred Tax Liability

Because U.S. tax laws and accounting rules differ, a company's earnings before
taxes on the income statement can be greater than its taxable income on a tax
return, giving rise to a deferred tax liability on the company's balance sheet. The
deferred tax liability represents a future tax payment a company is expected to
make to appropriate tax authorities in the future, and it is calculated as the
company's anticipated tax rate times the difference between its taxable income
and accounting earnings before taxes.

What is ESOP ESOPs, 'Employees Stock Ownership Plans' or "Employees Stock Options
Plans" is the generic term for a basket of instruments and incentive schemes provided to the
employees of the company. Over the years, the ESOP has taken various forms. ESOP when
spelled as 'Employees Stock Ownership Plans' , relates to the broad and generic meaning
which covers most types of share based payments made to employees. Share based payments
can take form of Employee Stock Option Plan(ESOP), Employee Stock Purchase Plan(ESPPs)
and Stock appreciation right However, ESOP as 'Employees Stock Options Plans' is one of the
mode of share based payment A stock option is 'a right but not an obligation granted to an
employee in pursuance of the employee stock option scheme to apply for shares of the
company at a pre-determined price'.

Read more at: https://www.caclubindia.com/articles/accounting-treatment-and-accounting-

valuation-of-esop-32024.asp

A derivative is a financial security with a value that is reliant upon or derived

from, an underlying asset or group of assets—a benchmark.

What Is a Dividend Payout Ratio?

The dividend payout ratio is the ratio of the total amount of dividends paid out to
shareholders relative to the net income of the company. It is the percentage of
earnings paid to shareholders in dividends. The amount that is not paid to
shareholders is retained by the company to pay off debt or to reinvest in core
operations. It is sometimes simply referred to as the 'payout ratio.'

The dividend payout ratio provides an indication of how much money a company
is returning to shareholders versus how much it is keeping on hand to reinvest in
growth, pay off debt, or add to cash reserves (retained earnings).