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The net income applicable to common shares figure on an income statement is **the bottom-line profit belonging to the common stockholders**, who are the ultimate owners, a company reported during the period being measured.

To determine the basic earnings per share you **simply divide the total annual net income of the last year, by the total number of outstanding shares**. Here is an example calculation for basic EPS: A company’s net income from 2019 is 5 billion dollars and they have 1 billion shares outstanding.

## How do you calculate net income from dividends and common stock?

Subtract the amount of money from issuing additional shares from the increase in stockholders’ equity. Then **add the amount of treasury stock purchased and the amount of dividends** paid to calculate net income. In this example, subtract $10,000 from $50,000 to get $40,000.

## How do you calculate net earnings?

To calculate net income, **take the gross income — the total amount of money earned — then subtract expenses, such as taxes and interest payments**. For the individual, net income is the money you actually get from your paycheck each month rather than the gross amount you get paid before payroll deductions.

**Key Takeaways**

- Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock.
- EPS (for a company with preferred and common stock) = (net income – preferred dividends) ÷ average outstanding common shares.

Determining Market Value Using P/E

**Multiply the stock’s P/E ratio by its EPS** to calculate its actual market value. In the above example, multiply 15 by $2.50 to get a market price of $37.50.

## Do you include common stock in net income?

Earnings available for common stockholders **equals net income minus preferred dividends**. Net income, or profit, equals total revenue minus total expenses. … Although preferred stockholders receive dividends before common stockholders, they do not share in the rest of the profits; only common stockholders do.

## How do you calculate net income with assets and liabilities and common stock?

Logic follows that if assets must equal liabilities plus equity, then **the change in assets minus the change in liabilities is equal to** net income.

## Is net income calculated before or after dividends?

Dividends and net income

Dividends represent a portion of a company’s net income. However, dividends don’**t cause** net income to go down. Rather, dividends are just one example of what a company might choose to do with its net income.