What Are Distributable Profits?ยง
Ladies and gents, have you ever wondered where all those shiny dividends you receive come from? Allow me to introduce you to the rockstar of the financial world: Distributable Profits! ๐
These are the profits that a company can legally distribute to its shareholders as, you guessed it, dividends. Itโs like the company saying, โHereโs your share of the pie!โ But wait, weโre not just talking any profitsโonly the ones that are realized and have successfully passed the responsibility gauntlet!
The Secret Formulaยง
Hereโs the secret recipe for distributable profits:
Distributable Profits = Accumulated Realized Profits โ Realized Losses โ (Previously Distributed or Capitalized Profits)
But remember, even Warren Buffett canโt distribute so much that the companyโs net assets fall below the sum of their paid-up or called-up share capital and their undistributable reserves. Sounds like a mouthful, right? ๐ฟ