Calculate dividend per share
Combine interim dividend paid and final dividend proposed before calculating the amount for each issued share.
Section 3.5 · Analysis and communication of accounting information
Exam scope and assessment notes
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. Use the ratio formulae in the syllabus appendix exactly; Cambridge states these are the only formulae accepted. Use year-end balances where appropriate unless the question specifies averages, and round to the requested number of decimal places. Practice is self-checked, not an official Cambridge grade. Full timed Papers 1–4 and human subject-teacher review remain outstanding.
Before you begin
- Use the AS Topic 1.6 ratio, financial-statement and stakeholder skills. These lessons add only the A Level ratios and interpretation required by Topic 3.5.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Annual ordinary dividend is $30,000 and 300,000 shares are issued. What is DPS?
What you will learn
- Calculate annual ordinary dividend from interim and final dividend
- Calculate dividend per issued ordinary share
- Distinguish proposed final dividend from cash already paid
Use the annual dividend definition
Dividend per share (DPS) = annual ordinary dividend ÷ number of issued ordinary shares. The appendix defines annual ordinary dividend as interim dividend paid + final dividend proposed.
This definition combines a paid interim dividend and a proposed final dividend. Do not substitute profit, EPS or a cash dividend yield. Keep currency units consistent and identify the number of issued shares.
Interpret the shareholder distribution
DPS is the ordinary dividend attributable to each issued share for the year under the stated formula. The final dividend is proposed, so it is not the same as cash already paid or proof that the proposal has been approved.
Compare DPS with EPS and dividend cover to assess how much profit is distributed. Consider the company's investment needs and cash position before recommending a higher payout.
Pause and explain
How should a final dividend proposed for the year be described?
Worked example
Interim dividend paid is $18,000, final dividend proposed is $42,000 and 600,000 shares are issued. Calculate DPS.
Show the worked solution
- Annual ordinary dividend = $18,000 + $42,000 = $60,000.
- $60,000 ÷ 600,000 = $0.10 per share.
- DPS is 10 cents per share; the final component remains proposed.
Answer Dividend per share is $0.10, or 10 cents.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A company paid an interim dividend of $24,000, proposes a final ordinary dividend of $36,000 and has 500,000 issued shares. Calculate DPS.
Give me a hint
Add the two annual dividend components before dividing.
Compare my reasoning
- Annual ordinary dividend = $24,000 + $36,000 = $60,000.
- $60,000 ÷ 500,000 = $0.12 per share.
- Label the result as 12 cents per share and keep the final amount described as proposed.
DPS is $0.12, or 12 cents, per share.
Look for these in your work
- Combine interim paid and final proposed dividend.
- Divide by issued shares.
- State the currency per share and proposal status.
Interim dividend paid is $12,000, final dividend proposed is $28,000 and issued shares are 400,000. Calculate DPS.
Give me a hint
Calculate the annual ordinary dividend first.
Compare my reasoning
- Annual ordinary dividend = $12,000 + $28,000 = $40,000.
- $40,000 ÷ 400,000 = $0.10.
- DPS is 10 cents per share.
DPS is $0.10, or 10 cents, per share.
Look for these in your work
- Calculate the $40,000 annual ordinary dividend.
- Divide by 400,000 issued shares.
- Report $0.10 per share.
A board proposes doubling the final dividend while profit and cash generation are weak. Explain two questions shareholders should consider before supporting it.
Give me a hint
Use the payout and cover relationship, then consider the company's financing needs.
Compare my reasoning
- Check whether profit available to ordinary shareholders and dividend cover can support the larger distribution.
- Review cash flows, debt obligations, planned investment and whether the final dividend has been formally proposed or approved.
- Assess whether the payout is sustainable and how it may affect future investment or borrowing.
Shareholders should test dividend cover and cash affordability and consider debt, investment plans and approval status before supporting the proposal.
Look for these in your work
- Link the proposed dividend to profit and dividend cover.
- Check cash needs and planned investment.
- Consider sustainability and approval status.
Common mistakes
- Omitting the proposed final dividend
- Using profit for the year instead of annual ordinary dividend
- Describing a proposed dividend as already paid
What can you explain now?
How is annual ordinary dividend defined in the appendix?
Compare with the explanation
Interim dividend paid + final dividend proposed
The specified annual amount combines the interim paid and final proposed dividend.
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Make it stick
State how annual ordinary dividend and dividend per share are calculated.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.