Dividends receivable
Dividends receivable refers to investment income from holding stocks of other companies, which represents the profit distribution that other companies decide to pay to investors according to their profit distribution plan. Dividends receivable is part of the company's operating income and represents the cash inflow from holding equity of other companies.
Receivable Dividends
Definition
Receivable dividends refer to the investment income that a company earns from holding shares of other companies. These dividends are distributed based on the profit distribution plan of the other companies. Receivable dividends are part of a company's operating income and represent the cash inflow from holding equity in other companies.
Origin
The concept of receivable dividends originated from the practices of corporate accounting and financial management. As inter-company investment activities increased, it became common for companies to hold shares of other companies and receive dividend income. To accurately reflect a company's financial status and operating results, receivable dividends were introduced as an important accounting item.
Categories and Characteristics
Receivable dividends can be categorized into the following types:
- Common Stock Dividends: These are dividends received from holding common shares of other companies, usually distributed based on the company's profitability and board resolutions.
- Preferred Stock Dividends: These are dividends received from holding preferred shares of other companies, with preferred shareholders typically receiving fixed dividends before common shareholders.
Characteristics of receivable dividends include:
- Stability: Preferred stock dividends are usually more stable, while common stock dividends may fluctuate based on the company's profitability.
- Cash Inflow: Receivable dividends represent the cash inflow from holding equity in other companies, helping to improve the company's cash flow situation.
Specific Cases
Case 1: A company holds 1,000 shares of Company A's common stock. Company A announces a dividend of 2 yuan per share. The company's receivable dividends amount to 1,000 shares * 2 yuan/share = 2,000 yuan.
Case 2: A company holds 500 shares of Company B's preferred stock. Company B distributes a fixed dividend of 5 yuan per share annually. The company's receivable dividends amount to 500 shares * 5 yuan/share = 2,500 yuan.
Common Questions
Q: Do receivable dividends affect a company's cash flow?
A: Yes, receivable dividends represent the cash inflow from holding equity in other companies, helping to improve the company's cash flow situation.
Q: Do receivable dividends fluctuate based on the company's profitability?
A: Common stock dividends may fluctuate based on the company's profitability, while preferred stock dividends are usually more stable.
