Liquidating dividend accounting
It is often seen as a sign of closing down the company.
Paying dividends to investors has several advantages, both for the investors and the company: The investors are more interested in a company that pays stable dividends.
It can also be stated as a percentage of the current market price.
In such a scenario, investors prefer that a company distributes the excess cash so that they can reinvest the money for higher returns.
The payment of dividends requires a lot of record-keeping at the company’s end.
The company has to ensure that the right owner of the share receives the dividend.
This type of dividend is used when the company does not have sufficient funds for the issuance of dividends.
When the company returns the original capital contributed by the equity shareholders as a dividend, it is termed as liquidating dividend.
Share repurchase occurs when a company buys back its own shares from the market and reduces the number of shares outstanding.