Word of the Day

: July 23, 2018

pro rata

adverb proh-RAY-tuh

What It Means

: proportionately according to an exactly calculable factor (such as a share or liability)

pro rata in Context

"The Senate also structured the budget bill so that any new money must be added pro rata, meaning proportionally to all areas where a deficit now exists." — Tim Morris, The Times-Picayune (New Orleans, Louisiana), 13 June 2018

"Specifically, an S corporation is not a separate taxable entity for federal, and most state, income tax purposes. Instead, profits and losses of an S corporation are divided pro rata among the shareholders and 'passed through' to their personal returns." — Mike Cote, The Union Leader (Manchester, New Hampshire), 27 May 2018

Did You Know?

The Latin phrase prō ratā, meaning "in proportion," is a shortening of prō ratā parte/portiōne, meaning "according to the fixed proportion." English users borrowed the shorter phrase in the 16th century, dropping the diacritics along the way, and began applying the term in contexts formal enough that Latin doesn't seem too out of place: in finance and law. There pro rata refers to distributing or allocating a quantity proportionately—for example, dividing up an annual interest rate pro rata into monthly rates; distributing pro rata a profit amongst shareholders; paying part-time employees pro rata (according to full-time pay); or allocating liability for a defective product pro rata. In the early 19th century, pro rata demonstrated its usefulness as an adjective, as in "a pro rata share" or "pro rata distribution." The verb prorate (based on pro rata) followed soon thereafter. Incidentally, the familiar noun and verb rate (as in "tax rates" and "rating on a scale of 1 to 5") also trace back to Latin prō ratā parte, but they entered the language back in the 15th century by way of Anglo-French.