Earnings available to common shareholders are defined as net income

Question

Quizplus · Accepted Answer

Earnings available to common shareholders are the portion of net income that is available to be distributed as dividends to common shareholders. This amount is calculated by subtracting preferred dividends from net income after taxes. Option B is incorrect because earnings available to common shareholders are calculated after taxes, not before taxes. Option C is incorrect because common dividends would be deducted from net income to calculate earnings available to all shareholders, not just common shareholders. Option D is incorrect because it does not take into account preferred dividends.

Earnings Available to Common Shareholders Are Defined as Net Income