How to Find Earnings Available for Common Stockholders

by Mark Kennan, studioD

Every year, publicly-held companies must release financial information so that investors can make informed decisions about whether or not to invest. As part of these disclosures, the company must release an income statement, showing the company's income and expenditure breakdown. From this information, you can calculate the earnings available to common stockholders. This metric measures how much profit the company generates per share after all expenses have been accounted for, including preferred dividends.

Subtract the company's total expenses from its total revenues to find the company's total earnings for the year. For example, if the company has $3.6 million in revenues and $3.1 million in expenses, the company has $500,000 in earnings.

Multiply the dividends per preferred share by the number of preferred shares outstanding to find the company's total preferred dividends paid. For example, if the company has 15,000 preferred shares and pays $1.91 per share, multiply 15,000 by $1.91 to find the company paid out $28,650 in preferred stock dividends.

Subtract the preferred stock dividends from the company's net earnings to find the earnings available for common stockholders. Finishing this example, subtract $28,650 from $500,000 to find the company's earnings available for common stockholders equals $471,350.

About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."