What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


How to Calculate Dividends & Total Revenue

Original post by Christopher Carter of Demand Media

Dividends represent payments made from a company to shareholders of a corporation. A corporation’s board of directors has the responsibility of authorizing dividends to shareholders of the business. Corporations have the ability to issue stock, property and cash dividends. A company generates revenue by providing a service or by supplying goods to consumers and businesses. Total revenue appears on a company’s income statement, also known as a profit and loss statement. A company that sells one product may multiply the selling price of the item by the number of units sold to determine total revenue.

Dividends

Step 1

Confirm the dividend payment amount per share. For example, a corporation’s board of directors may authorize a $1.25 per share dividend payment for common shareholders. View the minutes from the board of directors meeting to verify the dividend payment per share.

Step 2

Verify the number of shares that will receive a dividend payment. For instance, the board of directors may issue dividend payments to 75,000 shares. The corporate ledger or minutes from the board meeting can be used to confirm the number of shares that will receive a dividend payment.

Step 3

Multiply dividends per share by the number of shares receiving a payment. Let’s assume a corporation’s board of directors authorized a $1.25 per share dividend to 75,000 shares. In this scenario, the corporation’s dividend payment equals $93,750.

Total Revenue

Step 1

Identify the number of units sold. Total revenue cannot be computed without knowing how much of a product was sold during the period. Let’s assume a company sold 100,000 units of product A and 25,000 units of product B.

Step 2

Confirm the selling price of each item. For example, a company sells product A at $10 per unit and product B at $15 per unit.

Step 3

Multiply the selling price by the number of units sold. For example, a company that sold 100,000 units of product A at $10 per unit generated $1,000,000 in sales from product A. Multiply 25,000 units by $15 per unit which equals $375,000. This means the company generated $375,000 in sales from product B.

Step 4

Add the revenue generated by each item. For example, a company that generates $1,000,000 from product A and $375,000 from product B has total revenue of $1,375,000.

                   

Resources

References

About the Author

Christopher Carter loves writing business, health and sports articles. He enjoys finding ways to communicate important information in a meaningful way to others. Carter earned his Bachelor of Science in accounting from Eastern Illinois University.

Advertisement