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Pro rata is a Latin term that means "in proportion." It is used to describe how something is divided fairly based on a specific ratio or percentage. For example, if you share a bill with friends, each person pays a pro rata share based on how much they consumed. How does pro rata work in billing?
In a legal sense, pro rata may refer to a share to be received, an amount to be paid, or liability based on the fractional share of ownership, responsibility, or time. For example, a pro rata dividend is a dividend that is paid to each shareholder in proportion to the number of shares they own.
4 Ιουλ 2024 · Payment on accrued interest on bonds is calculated on a pro rata basis. Accrued interest is the total interest that has accumulated on a bond since its last coupon payment.
28 Δεκ 2023 · Some common examples of the pro rata concept include: Corporate dividends being paid to shareholders based on the number of shares they own as a percentage of total shares outstanding. If a shareholder owns 5% of the company's shares, they would receive 5% of any dividends declared.
Examples of pro rata being used include the division of a loan payment being adjusted monthly. The total amount paid by the borrower against the loan is the same each month.
If an employee is hired on a part-time basis and decides to work full-time mid-year, their vacation pay is calculated on a Pro Rata basis. This means that they would be entitled to receive vacation pay proportional to the number of days they worked as a full-time employee for that year.
Definition and Citations: Proportionately; according to a certain rate, percentage, or proportion. Thus, the creditors (of the same class) of an insolvent estate are to be paid pro rata: that is, each is to receive a dividend bearing the same ratio to the whole amount of his claim that the aggregate of assets bears to the aggregate of debts.
