Startup Terms Glossary
What is Pro Rata?
Pro Rata is a financial term that entails equal proportions. Translating to “in proportion” in Latin, when anything is given out “pro rata”, it means that everyone who has a share in a company gets equal payment based on how much equity they own. Pro rata is commonly used to determine dividend payouts.
Pro Rata Examples
An example of pro rata dividends:
- Example 1. A startup issues 10 shares and a dividend of $3 per share, making the value of all the shares $300. Ten stockholders buy a share in the startup. When it comes time to pay the dividends, pro rata would indicate that each shareholder receives $30 in dividends for the shares they own.
Here’s an article about pro rata.
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