Book Closure

What is Book Closure ?

On doing a book closure a company determines it profit or loss figures, which is always given by the balance sheet. According to these profit or loss figures the company sends out dividends to its shareholders.
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It is a mandate for every company to disclose its book closure and balance sheet details. Any company which violates this mandate is liable for scrutiny. This mandate was issued to safeguard the interest of the investors. The investor needs to have a fair idea of what percentage of a company’s profit is paid out as dividend to the shareholders. The investors also need to know what percentage of the company’s profit is invested in what kind of projects.  This information can only be gathered, only if a company releases its balance sheet and annual report.

It is so important for an investor to keep track of the book closure and balance sheet details of the company because he or she needs to foresee the company’s returns before he or she invests in it. Only a company which invests in high yielding projects is capable of generating high returns thereby assuring a constant flow of dividend over a long period of time.

Edited and Updated 18th January 2014

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