Answer to Question #219233 in Accounting for prakash reddy

Question

Take Britannia Industries Ltd as a case. In the context of its financial statements and annual report answer the following

a. It’s a largely acceptable practice among the corporate entities to pay dividend to its shareholders. Take Britannia Industries Ltd as a case. Discuss and differentiate the types of dividend the company paid for the financial year 2020-2021. Also, mention your understanding about what could be the accounting treatment of Dividend in the books of Britannia Industries Ltd.

b. Discuss and share your understanding on any three profitability ratios which you feel relevant to assess the profitability of the company

Answer 1

A dividend is a payment made by publicly traded corporations to its shareholders, with the funds coming from the company's net profit being the source. These incentives can take the shape of cash, cash equivalents, stock options, or other forms of remuneration, and they're usually paid out of the profits left over after all of the high costs have been fulfilled.

Profitability ratios are financial health indicators that can be used to make decisions regarding a company's future. This is accomplished by calculating the performance of a particular variable, such as the company's earnings, over a given time period. The figures show how successful a company is at generating profits from its assets, providing value to its shareholders, and generating cash flow.

Operating ratio- It establishes a link between operating costs and revenue generated from operations.

The Operating Profit Ratio (OPR)- It calculates the link between Operating Profit and Revenue from Operations (Net Sales).

Return on investment- The relationship between profit (profit before interest and tax) and capital employed is shown by return on investment or return on capital employed. Profit or loss is the outcome of a business's operations.