declaration date

(noun)

the day the Board of Directors announces its intention to pay a dividend

Related Terms

Examples of declaration date in the following topics:

  • Defining Dividends

    • In the United States, dividends are usually declared quarterly by the corporation's board of directors.
    • For each share owned, a declared amount of money is distributed.
    • Declaration date is the day the board of directors announces its intention to pay a dividend.
    • Ex-dividend date (typically two trading days before the record date for U.S. securities) is the day on which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend.
    • This reflects the decrease in the company's assets resulting from the declaration of the dividend.

  • Accounting Considerations

    • Cash dividend example: Firm A's Board of Directors declared a dividend on December 1, 2011 of $100,000 payable to shareholders of record on Feb 1, 2012 and payable on Feb 29, 2012.
    • On the declaration day, the firm's Board of Directors announces the issuance of stock dividends or payment of cash dividends.
    • On the date of payment, when dividend checks are mailed out to stockholders, the dividends payable account is debited and the firm's cash account is credited.
    • The declaration of this dividend debits retained earnings for this value and credits the stock dividend distributable account for the number of new stock issued (150,000*.15 = 22,500) at par value.

  • Maturity Date

    • Maturity date refers to the final payment date of a loan or other financial instrument.
    • In finance, maturity date or redemption date, refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.
    • The issuer has to repay the nominal amount on the maturity date.
    • In this case, the maturity date is the day when the bond is called.
    • Similarly, the maturity date, if applicable, is the date as the bond is redeemed.

  • Black-Scholes Formula

    • The Black-Scholes formula is a way of pricing a European option (an option that can only be exercised at its expiration date).
    • This is mainly due to the fact that as a bond reaches maturity, the true value becomes know (the bond issuer has publicly declared how much the bond will be worth at maturity).

  • Stocks

    • Given the total amount of money invested in the business, a share has a certain declared face value, commonly known as the par value of a share.
    • A business may declare different types (classes) of shares, each having distinctive ownership rules, privileges, or share values.
    • Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually any time after a predetermined date.

  • Corporations

    • A corporation has three parties: stockholders, board of directors, and executive officers.Stockholders own the corporation, and they usually meet once a year to vote for the board of directors, and one share equals one vote.Consequently, the majority shareholder dominates the board of directors, and therefore, controls the corporation.Of course, a majority shareholder could be another corporation.Next, the board of directors sets corporate policy, declares dividends, and selects the president and executive officers.Executive officers operate the daily business of the corporation.
    • Cumulative Preferred Stock – a corporation must pay past-due dividends to cumulative preferred stockholders before it pays dividends to common stockholders.Stockholders only receive dividends, when the board of directors declares them.
    • Convertible Stock – a stockholder can convert preferred stock into common stock on a specific date in the future.
    • Issuing of stock allows corporations to garner large amounts of financial capital.Furthermore, a corporation can raise capital by issuing bonds.A bond is a loan.However, a bond is standardized, allowing investors to buy or sell bonds on the financial markets.Moreover, a bondholder has two rights.First, a corporation pays interest on the bond, regardless of a corporation's financial position.Second, a corporation pays the face value of the bond on a specific date in the future.If a corporation bankrupts or it is dissolved, subsequently, the corporate debts are paid first that include bonds, bank loans, and taxes.If any assets remain,then the preferred stock holders are paid, and finally, the common stockholders are last.

  • Balance Sheet Analysis

    • Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year.
    • Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company.

  • Overview of Bonds

    • Corporations often borrow money by issuing bonds.A bond is similar to notes payable because they are written promises to pay interest and principal.We show a picture of a bond in Figure 1.Face value of this bond equals $1,000, and this bond matures on February 1, 2020.Consequently, whoever holds this bond will receive $1,000 on this date, and the bondholder also earns $100 ( 0.1 × $1,000) per year in interest.Most bonds pay interest twice annually or $50 every six months for this example.
    • Bonds differ from corporate stock.A share of stock represents ownership in a corporation.For instance, if a shareholder owns 1,000 shares out of 10,000, then he or she owns 10% of the corporation's equity.Moreover, the shareholder also receives 10% of the corporation's earnings, when the board of directors declares dividends.On the other hand, a bond represents a debt or a liability to the corporation.For example, if a person owns a bond with a face value of $1,000 with an 11% coupon interest rate and 20-year maturity, then the bondholder has two legal rights.Bondholder has a legal right to receive 11% or $110 interest each year while the bond is outstanding.Furthermore, the bondholder has a legal right to receive $1,000 when the bond matures in 20 years.

  • Call Provisions

    • A callable bond allows the issuer to redeem the bond before the maturity date; this is likely to happen when interest rates go down.
    • Call dates are the dates on which callable bonds can be redeemed early.
    • A Bermudan callable has several call dates, usually coinciding with coupon dates.
    • A European callable has only one call date.
    • An American callable can be called at any time until the maturity date.

  • Stock Warrants

    • A stock warrant entitles the holder to buy the underlying stock of the issuer at a fixed exercise price until the expiration date.
    • A stock warrant is similar to a stock option in that it entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiration date.
    • Expiration Date (the date the warrant expires; the longer the time frame involved until expiration the greater the opportunities for stock price appreciation, which increases the price of the stock warrant until its value diminishes to zero on the expiration date)
    • Restrictions on Exercise (American-style warrants must be exercised before the expiration date and European-style warrants can only be exercised on the expiration date.