# How to calculate dividends in 2017

You will need

- - knowledge of the total profit, the amount of tax deductions, the share of net profit;
- - the level of payments on preferred shares;
- - the number of preferred and ordinary shares.

Instruction

Dividend is a part of the profit of a joint stock company intended for payment to shareholders per one share. Payment of dividends is possible only after all payments and taxes have been paid to the federal and local budgets, replenishment of the production development fund, and filling up reserves. For ordinary shares, income varies, and for preferred shares it is fixed.

Payment of dividends is provided for in different schemes: quarterly, once in six months, once in nine months or once a year, which is determined by the policy of the joint stock company. Profit for dividend payment is distributed in accordance with the number of shares and their types. Payments on preferred shares are carried out in the first place, and only after that dividends are paid on ordinary shares.The amount remaining after the payment of dividends on preferred shares is intended to pay dividends on ordinary shares.

The calculation of the amount of dividends begins with the calculation of the amount of net profit of the joint stock company (PE). It is calculated as the difference between the taxable profit (NP) and the amount of tax deductions from the profit to the budget (Npr):

PE = NP - NPR (den. Units.).

PE = NP - NPR (den. Units.).

The charter of a joint stock company determines what proportion of net profit (DCPD,%) is used to pay dividends. Calculates the total amount of dividends (Sd) as follows:

Cd = PE * DCPD / 100 (den. Units).

Cd = PE * DCPD / 100 (den. Units).

From the total amount (Sd), the payment of fixed amounts of dividends on preferred shares (Cpd), which are calculated as the product of the nominal value of a preference share (Tsnompr) by the level of payments on them (Uvpr,% to par), and the total number of preferred shares ( ):

Cfr = Cfr × Cnompr × Cfr / 100 (den. Units).

Cfr = Cfr × Cnompr × Cfr / 100 (den. Units).

The payment on a single preferred share is respectively:

Tsnprpr × Uvpr / 100 (den. Units).

Tsnprpr × Uvpr / 100 (den. Units).

For the payment of dividends on ordinary shares (SDO), the amount remaining from the total amount of dividends after the payment of dividends on preferred shares (Spr) is intended:

Sdo = Sd - Spra (den. Units.).

Sdo = Sd - Spra (den. Units.).

The payment on a single ordinary share is respectively: Sdo / Ko, where Ko is the number of ordinary shares.

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note

It is possible that payments on preferred shares have a fixed value that does not depend on the nominal value, which is determined by the Charter of the joint stock company.

Helpful advice

To calculate the amount of dividends in order to avoid errors, it is possible to use spreadsheets with entered and saved formulas.

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