Net income to common shareholders

Net income to common shareholders is the part of a company's profit that belongs to the owners of its ordinary shares. It starts from net income and subtracts anything other investors have a prior claim on, most often dividends owed to holders of preferred stock.

Financial data sites often show several net income lines in a row, each one a step closer to this figure. Earnings from continuing operations come first. Net income to company adds the result of any discontinued operations. Net income then subtracts the share that belongs to minority interest holders, and net income to common shareholders subtracts preferred dividends. For a company with none of those items, every line shows the same number.

This is the figure earnings per share is built on: net income to common shareholders divided by the weighted average number of common shares. When the lines above it differ, it is usually the one to use for any ratio aimed at common shareholders, such as the P/E ratio, because it measures what the shares you would own earned.

Some data sites show this last figure twice, including and excluding extra items. Extra items is short for extraordinary items, a category of rare, unusual gains and losses that US accounting rules dropped starting in 2016, so for most companies today the two lines match.