Business Glossary

net income available to common stockholders divided by the weighted-average number of shares outstanding. Net income available to common stockholders is net income less declared preferred dividends for the year. If the preferred stock is noncumulative, preferred stock dividends are subtracted only if they are declared during the year. If the preferred stock is cumulative, the dividends are deducted even if they are not declared in the current year. The weighted-average number of common stock shares outstanding is determined by multiplying the number of shares issued and outstanding for any time period by a fraction, the numerator being the number of months the shares have been outstanding and the denominator being the number of months in the period (e.g., 12 months for annual reporting).