Hi,
While calculating why do we include proposed dividend in calculation of FMP.I mean why we are not deducting as liability from the total assets to for calculation of capital employed?
4 Replies
Harshal Fifadra
(Chartered Accountant)
(1489 Points)
Replied 04 October 2011
Capital Employed = Assets (-) Liabilities
In the above formula liabilities are those ones which are actual liabilities . Proposed dividend is not deducted because it is not an actual liability . The company may in future either increase or decrese the dividend declared . However in case it was Declared Dividend then it is an actual liability and hence it is deducted from the assete to calculate Capital Employed .
ashish gupta
( student)
(1922 Points)
Replied 04 October 2011
harshal is right proposed dividend is not liability
Swapnil Jain
(Finance - FP&A)
(564 Points)
Replied 09 October 2011
| Originally posted by : Harshal | ||
 |
Capital Employed = Assets (-) Liabilities In the above formula liabilities are those ones which are actual liabilities . Proposed dividend is not deducted because it is not an actual liability . The company may in future either increase or decrese the dividend declared . However in case it was Declared Dividend then it is an actual liability and hence it is deducted from the assete to calculate Capital Employed . |
 |
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