What are earnings available?

Publicly traded companies have the ability to reward investors dividends, which are distribution of cash or shares using excessive cash flow. However, dividends are considered only after further financial obligations are met. If annual profits not only meet but exceed the budget requirements, profits will become available incomes that the company management team can use as a dividend division. The decision must have support from the Board of Directors and the notice is usually made in conjunction with the issuing of the financial statements.

The amount of profits available to the company is used to create a profit value per share (EPS). It is a rate of profitability or other way of illustration of net income that is earned during the period. To obtain this number, the amount of earnings and outstanding ordinary shares are used to calculate. Available revenue divided by excellent shares leads to the number of the lower line or EPS, based on Certain accounting standards. Once the annuals are taken into accountThere may be available earnings, such as tax payments and preferred dividends. If an excess of cash flows is generated, they face the company's managerial team. In principle, these additional profits can be used in one of the two ways, including the company's activities or as a financial reward to investors in the form of dividend payments.

Financial conditions must be very favorable for available revenues to be distributed to shareholders. If the profits do not reach or are equal to financial obligations, the available earnings are not sufficient to reward investors. In fact, if profits are not enough to support the company's operations or growth plans, the management team may need to contact the Markets capital capital to raise additional money. One way to achieve this is to sell other own capital on the stock market in the subsequent offer. Other incomes can only be converted for investorsEHDY, when profits overcome other obligations, can be transformed into rewards for investors.

The organization is not obliged to use redundant profits to pay dividends. Companies in high growth industries, such as technology, often have to reinvest in business to remain competitive. In this case, the income may be used for internal growth purposes rather than paid the division of investors. Some companies contribute to slower growth, such as electricity providers, and can more likely use available earnings to pay dividends investors rather than expansion.