Payment of interest on borrowings is compulsory whereas dividend payments are optional.

Name: Payment of interest on borrowings is compulsory whereas dividend payments are optional.
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Question

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Interest on borrowings is a legal obligation that must be paid as per the terms of the loan agreement, while dividends are distributed at the discretion of the company's board of directors and depend on the company's profitability and dividend policy.

Payment of Interest on Borrowings Is Compulsory Whereas Dividend Payments