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pro rata

 
Dictionary: pro ra·ta   (prō rā'tə, rä'-, răt'ə) pronunciation
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adv.
In proportion, according to a factor that can be calculated exactly.

[Latin prō ratā (parte), according to the calculated (share) : prō, according to + ratā, feminine ablative of ratus, calculated.]

pro-rata pro-ra'ta (prō-rā'tə, -rä'-, -răt'ə) adj.

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Investment Dictionary: Pro-Rata
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Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the whole.

Investopedia Says:
For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share he or she owns. Pro-rating also refers to the practice of applying interest rates to different time frames. If the interest rate was 12% per annum, you could pro-rate this number to be 1% a month (12%/12 months).

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Real Estate Dictionary: Pro Rata
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An equal amount, according to the fraction held by each.
Example: A owns 40%, B owns 30%, C owns 20%, and D owns 10%. A $100 pro rata distribution is paid to the owners: A received $40, B received $30, C received $20, D received $10.

Accounting Dictionary: Pro Rata
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Basis for allocating an amount proportionately to the items involved. An amount may be proportionately distributed to assets, expenses, funds, and so forth. For example, at year end, underapplied overhead may be allocated to work-in-process, finished goods, and cost of sales based on the dollars or units applicable to those accounts. Assume underapplied overhead is $1000, work-in-process is $4000, finished goods is $5000, and cost of sales is $1000. The pro rata charge to work-in-process, for instance, would be $400 ($4000/$10,000 x $1000). The journal entry is:

Work-in-process 400

Finished goods 500

Cost of sales 100

Factory overhead 1000

Law Encyclopedia: Pro Rata
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This entry contains information applicable to United States law only.

[Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share.

In a bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. If the debtor has any remaining funds, the money is divided proportionately among the creditors, according to the amount of the individual debts.

A pro rata clause in an automobile insurance policy provides that when an insured person has other insurance policies covering the same type of risk, the company issuing the policy with the pro rata clause will be liable only for a proportion of the loss represented by the ratio between its policy limit and the total limits of all the available insurance.

Latin Phrase: Pro Rata
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Proportionally

Wikipedia: Pro rata
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Search Wiktionary Look up pro rata in Wiktionary, the free dictionary.

Pro rata is an adverb or adjective, meaning in proportion.[1] The term is used in many legal and economic contexts, and sometimes spelled pro-rata.

Contents

Meanings of pro rata

More specifically, pro rata means:

  1. In proportion to some factor that can be exactly calculated. [2][3][4]
  2. To count based on amount of time that has passed out of the total time.
  3. Proportional Ratio [5]

Pro-rata has a Latin etymology, from pro, according to, for, or by, and rata, feminine ablative of calculated (rate or change). [6]

Examples

Examples in law and economics include the following noted below.

Torts

When liability for a toxic tort or Products liability concerns many manufacturers, the liability under tort law is allocated proportionally. [7]

Partnership liability

Each of several partners "is liable for his own share or proportion only, they are said to be bound pro rata. An example ... may be found in the liability of partners; each is liable ... only pro rata in relation to between themselves." [8]

Bankruptcy law

When a debtor files for bankruptcy, and "the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. If the debtor has any remaining funds, the money is divided proportionately among the creditors, according to the amount of the individual debts." [9] "A creditor of an insolvent estate is to be paid pro rata with creditors of the same class." [10]

Worker's pay and benefits

A worker's part-time work, overtime pay, and vacation time are typically calculated on pro rata basis. [11][12][13]

Under US Federal regulations, a government worker has the right, that, "When an employee's service is interrupted by a non-leave earning period, leave is earned on a pro rata basis for each fractional pay period that occurs within the continuity of employment." [14]

The American Federation of Teachers (AFT), a US labor union, argues that all part-time or adjunct instructors should get pro-rata pay for teaching college courses. [15] This is an important issue, as of 2007, for part-time faculty. [16]

Irish secondary school teachers are entitled to pro-rata pay for part-time work. [17]

Under British employment law, "Regulations state that, where appropriate, the pro rata principle should be applied to any comparison ... to be given ... holiday." [18]

Likewise, in Tasmania, Australia, the law clearly grants workers the privilege of part-time benefits for leave of absence. [19][20] This is granted under the Long Service Leave Act 1976. [21]

Investment laws

In corporate practice, "a pro-rata dividend means that every shareholder gets an equal proportion for each share he or she owns." [5]

In banking, "Pro-rating also refers to the practice of applying interest rates to different time frames. If the interest rate was 12% per annum, you could pro-rate this number to be 1% a month (12%/12 months)." [5]

Insurance

In insurance, pro rata is used to determine risk based on the time the insurance policy is in effect. [22] It may also be used to describe proportional liability when more than one person is responsible for a loss or accident. [9]

Insurance cancellation method

Calculation of return premium of a cancelled insurance policy is done using a cancellation method call pro rata. First a return premium factor is calculated by taking the number of day remaining in the policy period divided by the number of total days of the policy. This factor is then multiplied by the policy premium to arive with the return premium. Traditionally this has been done manually using an paper wheel calculator. Today it is normally done using an online wheel calculator. [23]

College tuition

When a college student withdraws, colleges almost always refund tuition payments on a pro-rata basis. [24]

See also

References

  1. ^ Farlex's The Free Dictionary
  2. ^ Answers.com. Accessed May 29, 2008.
  3. ^ Investor Words web site
  4. ^ Ehrich, Eugene, Amo, Amas, Amat and More, p. 233 (New York, Harper Row 1985). ISBN 0-06-27217-1.
  5. ^ a b c Investopedia web site. Accessed May 29, 2008.
  6. ^ The Free Dictionary. Accessed May 29, 2008.
  7. ^ [1] State of Maine government web site pdf file listing of Pro Rata Share Responsibility.
  8. ^ ClickDocs UK Legal web site (quote marks changed to italics for clarity).
  9. ^ WWLIA legal web site
  10. ^ John Steven Niznik, Pro Rata, at Job Search Tech web site.
  11. ^ TheSite.org web page about pro-rata payment for part-time work
  12. ^ Uk Answers.com blog
  13. ^ US Department of Commerce Office of Human Resources Management official web site, citing 5 CFR 630.204.
  14. ^ AFT web site
  15. ^ California Part-time Faculty Association official web site page regarding pro-rata pay
  16. ^ Association of Secondary Teachers Ireland official web site page regarding pro-rata pay
  17. ^ NASUWT web site Holiday is used here in the British sense of the American vacation.
  18. ^ Tasmanian Government official web site
  19. ^ [2] Tasmanian Government official web site pdf file.
  20. ^ Tasmanian Legislation online official web site
  21. ^ InsuranceZA web site
  22. ^ Online Wheel Calculator
  23. ^ See, e.g.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

 
 

 

Copyrights:

Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.  Read more
Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Real Estate Dictionary. Dictionary of Real Estate Terms. Copyright © 2004 by Barron's Educational Series, Inc. All rights reserved.  Read more
Accounting Dictionary. Dictionary of Accounting Terms. Copyright © 2005 by Barron's Educational Series, Inc. All rights reserved.  Read more
Law Encyclopedia. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.  Read more
Answers Corporation Latin Phrase. © 1999-2009 by Answers Corporation. All rights reserved.  Read more
Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Pro rata".  Read more