Earning bonuses on a regular basis is the desire of every investor in a company. The intervals at which such pay outs are made to investor vary depending on the nature of the business and how profitable it is. The period of payment may be every month, every year or any other specified time. Most companies prefer to pay the bonuses yearly as they release their financial statements. There are many types of dividend payments that exist in Florida.
One of the most well-known types is the cash bonus. This type is determined when part of the profit is shared among the shareholders depending on the proportion of shares that each of them holds. The board of directors recommend the amount of money to be given as bonus on the date of declaration. The allocation is done on the date or record while the actual disbursement is done on the date of payment.
The major advantage of giving cash bonus to shareholders is that they get an opportunity to enjoy the economic value of the company. The major disadvantage is that cash bonuses tend to influence the share price. In most cases it is usually by the same proportion. What this means is that when a bonus of 5% is issued to the shareholders, a drop of 5% in the share price should be anticipated.
Stock bonuses are another common form. These are issued in the form of extra shares for each share held by a shareholders. For instance, the company may issue an additional share for every two shares such that an investor with a thousand shares ends up with an extra five hundred shares. The term is only used if the company in question issues less than 25% of shares held. If this value is exceeded the transaction is known as a stock split.
Property bonuses are examples of non-monetary bonuses. Since the fair market value of the property tends to differ from the book value the traction is usually captured as either a profit or a loss. The use of property bonuses is preferred by companies that wish to reduce the amount of reported and taxable income.
Scrip bonuses are issued under special circumstances. They are recommended by the board of directors when the company does not have monetary bonus to issue but is still keen on paying out at some point in the future. They work like promissory notes. The company may be planning to plow back the profits made or may not be making enough profits yet.
A Liquidating bonus is a rather rare type of pay-out. This bonus is issued to shareholders who contributed the initial capital. It is so called because it is usually issued when a company is winding up. The accounting processes involved are similar to those of cash bonus. The only difference is that the source of the money is a new paid-in capital account.
Companies may issue one or more of these dividends depending on their financial position and the preference of shareholders. Most investors prefer companies that are paying out dividends on a regular basis. Existing shareholders are also more confident in the company if they are gaining something on a regular basis. The main downside is that the amount of retained earnings is reduced.
One of the most well-known types is the cash bonus. This type is determined when part of the profit is shared among the shareholders depending on the proportion of shares that each of them holds. The board of directors recommend the amount of money to be given as bonus on the date of declaration. The allocation is done on the date or record while the actual disbursement is done on the date of payment.
The major advantage of giving cash bonus to shareholders is that they get an opportunity to enjoy the economic value of the company. The major disadvantage is that cash bonuses tend to influence the share price. In most cases it is usually by the same proportion. What this means is that when a bonus of 5% is issued to the shareholders, a drop of 5% in the share price should be anticipated.
Stock bonuses are another common form. These are issued in the form of extra shares for each share held by a shareholders. For instance, the company may issue an additional share for every two shares such that an investor with a thousand shares ends up with an extra five hundred shares. The term is only used if the company in question issues less than 25% of shares held. If this value is exceeded the transaction is known as a stock split.
Property bonuses are examples of non-monetary bonuses. Since the fair market value of the property tends to differ from the book value the traction is usually captured as either a profit or a loss. The use of property bonuses is preferred by companies that wish to reduce the amount of reported and taxable income.
Scrip bonuses are issued under special circumstances. They are recommended by the board of directors when the company does not have monetary bonus to issue but is still keen on paying out at some point in the future. They work like promissory notes. The company may be planning to plow back the profits made or may not be making enough profits yet.
A Liquidating bonus is a rather rare type of pay-out. This bonus is issued to shareholders who contributed the initial capital. It is so called because it is usually issued when a company is winding up. The accounting processes involved are similar to those of cash bonus. The only difference is that the source of the money is a new paid-in capital account.
Companies may issue one or more of these dividends depending on their financial position and the preference of shareholders. Most investors prefer companies that are paying out dividends on a regular basis. Existing shareholders are also more confident in the company if they are gaining something on a regular basis. The main downside is that the amount of retained earnings is reduced.
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