Stock Dividend
Dividend, in corporation finance, a fund appropriated out of the profits of a corporation and distributed among its stockholders; also the share of the fund received by a stockholder. Dividends are usually declared periodically (quarterly, semi-annually, or annually) by the directors of a corporation. The action of a board of directors with respect to the declaration or non declaration of dividends is usually final and conclusive upon the stockholders and is subject to review by the courts only in the event that the action is arbitrary or capricious.
Dividends are distributed on a proportional basis; the fractional share of the total dividend received by stockholders is equal to the proportional share of the stocks owned by them. Holders of the preferred stock of a company generally have a prior right to the payment of dividends over holders of common stock, and if their stock so provides, are paid at a fixed periodic rate. Preferred dividends may be cumulative or non cumulative. Cumulative dividends are those that, if not paid for one or more periods, constitute charges on the profits of succeeding periods and must be paid at a future date before dividends may be distributed on common stock. Non cumulative dividends, if omitted, do not constitute charges on future profits. Dividends may take the form of additional shares of stock or of the right to purchase stock for a fixed sum per share; such dividends are called stock dividends and rights.
The term dividend is applied also to the assets of a bankrupt or insolvent business that are distributed among its creditors during the course of its liquidation. The term is used in insurance to signify the sum appropriated out of profits for distribution among policyholders whose policies so provide; such dividends may be used to reduce the next premium.
Liquidation:
Liquidation, winding up of a company when it ceases business. There are two reasons to liquidate a company: one is its irretrievable insolvency or bankruptcy; the other is that its owners do not want it to continue (because it has done the job it was set up to do or for some other cause, such as the owners falling out with each other). Either the company's creditors or its owners may institute liquidation proceedings, which are governed by legislation.
The liquidator appointed to administer the liquidation has several responsibilities. A list of creditors has to be drawn up, and the company's assets have to be sold and the proceeds allocated among creditors according to clearly defined principles. Creditors have to prove that they are owed money, and fall into two types: secured and unsecured. Secured creditors are those who in return for providing the company with credit were given a charge on the company's property; the charge may be fixed or it may be floating In principle secured creditors are paid before unsecured creditors, but some categories of unsecured creditor are paid first. These include the liquidator, the tax authorities, and the workforce; however, there are usually limits on how old the debts may be It is also important to remember that even preferential creditors often receive less than they are owed because the company's assets when liquidated do not raise enough to pay them in full.
Insurance:
The modern age of industrialization has rendered man and his property most vulnerable of different types of risks and uncertainties of life. The uncertainties may relate to the life of a man such as death, unemployment. Sickness or to his properties such as risks arising form accident, fire, earth quake, floods, perils at sea and so on. Insurance is the result of mans search for security. The effective solution of reducing the burden of these risks and uncertainties has been devised by shifting these risks to agencies or persons such function of shifting these risks is known as insurance.
Insurance is a co-operative method for spreading over the loss caused by a particular risk, over a number of persons, who agree to share the loss. However insurance can reduce the financial burden arising from a risk, but cannot eliminate the risk.
Profits:
Profit, in business, the monetary difference between the cost of production and marketing of goods or services and the prices subsequently received for those goods or services. Profit is an essential competitive feature of buying and selling in the economic system. The opposite of profit is loss, whereby the cost of producing certain goods or services is higher than the price a buyer is willing to pay for them. In free market economy, the will to make and function by profits is termed the profit motive. Though normally taken as the basic motive for business, its universality has been challenged by the theory of the firm. Japanese firms, especially, are renowned for preferring market share over at least short-term profits.
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