Earnings available for common stockholders is calculated as net profits ________.
A) before taxes minus preferred dividends
B) after taxes minus preferred dividends
C) after taxes minus common dividends
D) before taxes minus common dividends

Question

Quizplus · Accepted Answer

Earnings available for common stockholders is the amount of net profit that remains after deducting all expenses, including taxes and preferred dividends. Therefore, the correct option is B, which subtracts preferred dividends from net profits to arrive at earnings for common stockholders.

Earnings Available for Common Stockholders Is Calculated as Net Profits