If a company has share capital of Rs.1,00,000 divided into 10,000 shares of Rs.10 each. This company has earned Rs.20,000 during the year. Now this profit can be divided among all the shareholders holding 10,000 shares. Each shareholder will get Rs.2 per share (Rs.20000/10000). For example Mr. A holds 500 shares he will get Rs.1,000 (500 x Rs.2) as dividend.