Definitions #
The portion of a company's or partnership's earnings that a particular stakeholder is entitled to receive, often based on ownership percentage or agreed terms.
Technical In corporate finance, the proportional entitlement to net income after taxes and preferred dividends, typically distributed as dividends to shareholders or allocated under partnership agreements.
Etymology #
From Middle English share, from Old English scearu (division) and Old French profiter (to profit). In financial context, usage dates back to early partnerships where gains were divided.
Collocations #
- pro rata share of profits 按比例分配的利润份额
- share of net profits 净利润份额，扣除税费后的利润分配
Real Business Examples #
- The investment agreement stipulates that the minority partner receives a 20% share of profits after operating expenses are deducted.
- During the annual general meeting, the board announced a share of profits that exceeded analysts' expectations due to strong operational performance.
Register & Variants #
- Register: formal
- BrE/AmE: Common in both BVE and AmE; used formally in financial statements and shareholder reports.
Synonyms & Antonyms #
- Synonyms: profit share, income share, earnings share
- Antonyms: loss share, deficit allocation
Common Errors #
- Confusing share of profits with revenue share; revenue is gross, profit is net. Use 'share of profits' only when referring to net income after expenses; otherwise say 'share of revenue'.
- Assuming profit share is always proportional to ownership percentage. Partnership agreements may specify disproportionate allocations; always check the governing agreement.
Confusable Terms #
- dividend vs share of profits
- A dividend is a distribution paid to shareholders, typically per share, while share of profits is a broader term covering any entitlement to earnings.
- profit margin vs share of profits
- Profit margin is a ratio of profit to revenue, not an amount of profit allocated to a stakeholder.
Frequently Asked Questions
Is share of profits the same as dividends??
Not exactly: dividends are one way to distribute profits to shareholders, but share of profits can also refer to partnership distributions or contractual profit split arrangements.
How is share of profits calculated??
It depends on the legal structure: for corporations, it's typically based on ownership percentage of shares outstanding; for partnerships, on the profit-sharing ratios in the partnership deed.