Difference between Profit and Dividend
1.Profit
Profit is earned by the company during the year and dividend is distribution a percentage of such profit. It is important to remember that company may have profitable operation but he still not paying dividend .
2. Dividend
The dividend payment is a total management decision. in simple words dividend payment is not an obligatory requirement and management may decided to reinvest the profit instead of paying out.
Dividend payment is normally described as percentage of nominal value.
Example of Dividend
Company A has decided to pay 25% dividend . The nominal price of share of A is 100 USD and market value of share is 550 USD.
It means that company has decided to pay 25 USD for per share of investment ( i.e 100 per share)
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