How do you calculate the total amount available for dividends given shares issued and net income?

To determine the total amount available for dividends, you begin with the total equity available from shares, which can be computed by taking the total shares issued and multiplying them by the price per share. This gives you the total equity that shareholders will benefit from. However, to understand the net amount available for dividends, you must also consider the dividends that have already been paid.

Subtracting dividends paid from the calculated total shares times the price per share effectively gives you the remainder of profits or funds that can be distributed as dividends. It's crucial to account for these dividends already issued, as they reduce the amount that can still be allocated to shareholders, ensuring accurate financial reporting and distribution.

This method reflects the shareholders’ equity and aligns with practices in financial accounting, presenting a clear picture of what is left for dividends after covering any distributions that have been made earlier. Such calculations are central to managing a company’s dividends and ensuring that the distribution aligns with its financial status and obligations.