Total Shareholder Return

Posted in Finance, Accounting and Economics Terms, Total Reads: 1216

Definition: Total Shareholder Return

Total shareholder return is the sum of capital gains and the dividend paid on that security. It could alternately be defined as the return from all cash flows investment made in a project.

Capital gains is the increase in the value of asset (higher than the purchase price). Capital gains is calculated when the asset has been sold .Return  is a part of income which is taxable. A capital loss is occurred when the value of an asset when sold is below its purchase price.

Dividend is decided by the management to be issued to its shareholders. It is expressed as a percentage of the current market price of the asset.


Formula Used:

Total shareholder Return =(P1-P0)/P0 + D1/P0

P0 is the purchase price of the asset

P1 is the price at which asset is sold

D1 is the dividend issued by the company’s board

Example :

Stock of a Company ABC was purchased at a price of Rs 70 per share by MrX  and  its market price at which he sold the stock was Rs 75per share . The company also issued an annual dividend of Rf15 .Calculate  the total share holder return ?

TSR= ((75-70)/70 + 15/70)*100

=(20/70) *100

= 28.28%


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