Pro rata allotment is a term used in finance and business to describe a proportionate allocation of something. It means that whatever is being allocated will be distributed in equal portions. Pro rata allotment is used in various situations, such as when a company receives applications for more shares than the shares offered to the public for subscription, which is known as oversubscription. In this case, the company has three alternatives, among which pro-rata allotment is one of them. Pro-rata allotment means allotment of fewer numbers of shares to applicants having more numbers of shares on a proportionate basis.

To determine the pro-rata ratio, the company has to calculate the total number of shares applied for and the total number of shares allotted. The pro-rata ratio is the ratio of the total number of shares applied to the total number of shares allotted. The pro-rata ratio is used by a company to determine the number of shares allotted to an applicant if the number of shares applied by him is given, or the number of shares applied by an applicant if the number of shares allotted to him is given.

Pro rata allotment can also be used in insurance to determine the amount of premium due for a policy that only covers a partial term. Allocating the appropriate portion of an annual interest rate to a shorter time frame can also be done via pro rata.

In summary, pro rata allotment is a proportional allocation of something, and it is used in various situations, such as oversubscription of shares and insurance. It is calculated by determining the pro-rata ratio, which is the ratio of the total number of shares applied to the total number of shares allotted.