What ratio is net income divided by weighted average shares outstanding?

The ratio of net income to weighted average shares outstanding is earnings per share (EPS).

EPS converts a company’s profit into an amount attributable to each common share. Using weighted average shares matters because companies can issue or repurchase shares during an accounting period; a simple year-end share count could distort the result. Basic EPS generally uses income available to common shareholders, while diluted EPS also reflects potentially dilutive securities such as options and convertible bonds.

EPS became especially useful as corporations and public stock markets expanded, giving investors a common way to compare per-share profitability. It is also a key input in the price-to-earnings ratio: market price per share divided by EPS.

EPS is not the same as cash flow per share, book value per share, or dividend per share. A company may report strong EPS while paying little or no dividend, because earnings can be retained for expansion, debt repayment, or other purposes.