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متابعة

Describe the similarities and differences between "Dividend Payments" to shareholders of a company, and "Drawings" by a proprietor.

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تم إضافة السؤال من قبل مستخدم محذوف‎
تاريخ النشر: 2014/09/22
Ashish Toms
من قبل Ashish Toms , Assistant Manager- MIS (Investments) at Landmark Group , Landmark Group

Similarities:

- Both are amounts paid by the entity to the owners of the company.

- Both result in the utilization of funds to lessen the equity (capital)

- Both are a way of paying back the owners of the entity for their investment. It can be the benefit or return.

 

Differences:

- Dividends are generally paid out of the profits of the company, while drawings may or may not be from the profits

- Dividend payment affects the price of shares but in case of drawings it is not applicable.

- Dividend payouts are carefully decided based on the financial position of the company and its cash requirements. Drawings are personal withdrawal of funds by the proprietor.