How to Calculate Net Income Based on Stock Price

Visit any financial website that gives stock information and find a company’s P/E ratio, price per share and number of shares outstanding, which is information that a financial website provides for all public companies. For example, assume a company’s P/E ratio is 12, its price per share is $20 and it has 1 million shares outstanding.
Substitute the values into the P/E ratio formula: P/E ratio = price per share/(net income/shares outstanding). In this example, substitute the values to get 12 = $20/(net income/1 million).
Multiply both sides of the equation by the right side’s denominator. In this example, multiply both sides by (net income/1 million) to get 12 x (net income/1 million) = $20.
Divide the company’s P/E ratio by its total shares outstanding. In this example, divide 12 by 1 million to get 0.000012. This leaves 0.000012 x net income = $20.
Divide the company’s stock price per share by your result to calculate its net income over the past 12 months. In this example, divide $20 by 0.000012 to get approximately $1.7 million in net income over the past 12 months.

How to Calculate Stock Prices From a Balance Sheet

Identify the firm's total stockholder's equity holdings from the balance sheet. This includes the firm's preferred stock, common stock, additional paid-in-capital, and any retained earnings. For example if the firm's balance sheet showed $1 million of preferred stock, $5 million of common stock, $800,000 of additional paid-in-capital, and $500,000 in retained earnings, the firm's total equity holdings value would be 7.3 million. The equation would be 1,000,000 + 5,000,000 + 800,000 + 500,000 = 7,300,000. If the firms total assets are $10 million, this would leave $2.7 million in liabilities. The equation would be 10,000,000 - 7,300,000 = 2,700,000.
Determine the firm's total common stockholder's equity from the balance sheet. Calculate the firm's total common stockholder's equity by subtracting the total preferred stock value from the firm's total stockholder's equity holdings. For example, if the firm's total stock holder's equity is $7.3 million and its preferred stock holdings are $1 million, then the firm's total common stock holder's equity would be $6.3 million. The equation would be 7,300,000 - 1,000,000 = 6,300,000. The $6.3 million represents the total value of the common equity shareholders portion of the firm's total equity capital structure.
Calculate the firm's stock price book value from the balance sheet. Divide the firm's total common stockholder's equity by the average number of common shares outstanding. For example, if the firm's total common stockholder's equity is $6.3 million and the average number of common shares outstanding is $100,000, then the stock price's book value for the firm would be $63. The equation would be 6,300,000 / 100,000 = 63. This would be based on the information obtained from the firm's balance sheet.