TTM Net Income Available to Common Shareholders

Category

Ratios

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Formula

TTM Net Income Available to Common = TTM Net Income Attributable to Parent − TTM Preferred Dividends and Other Adjustments

Reference

ASC 260, Earnings per Share

Source

Calculated by GeminIQ from figures reported in SEC filings

TTM net income available to common shareholders is the profit left for a company's common stockholders over the trailing twelve months, after every expense, tax, the share belonging to noncontrolling interests, and dividends on preferred stock have been deducted. It is the numerator used to calculate earnings per share.

For most companies it is close or equal to net income. The gap matters for companies with preferred stock, participating securities, or large noncontrolling interests, whose claims come ahead of the common shareholders'.

The quarterly figure is tagged NetIncomeLossAvailableToCommonStockholdersBasic in XBRL, which the SEC describes as income after tax, noncontrolling interests, preferred dividends, and amounts allocated to participating securities. ASC 260 requires this adjustment: basic EPS divides income available to common stockholders by the weighted average common shares outstanding. Dividends declared on preferred stock are deducted, and for cumulative preferred stock the period's dividends are deducted even if they were not declared, because they accrue as a claim senior to common equity. Some companies also allocate a share of earnings to unvested restricted shares that receive dividends, using the two-class method.

The trailing total adds the four most recent quarters. With no separate fourth-quarter filing, the fourth quarter is the 10-K annual figure minus the nine-month figure in the third-quarter 10-Q. Companies often report the amount only on the EPS reconciliation in their notes rather than on the income statement face, so it may need to be taken from the footnotes or built as net income attributable to the parent minus preferred dividends.

This is the right measure of earnings when valuing common stock. Return on common equity typically uses it as its numerator, and dividing it by weighted average shares gives TTM basic EPS. Market capitalization values only the common shares, so price to earnings should use earnings available to common rather than total net income.