Book Value Formula Stock

The price to book value ratio p b formula is also referred to as a market to book ratio and measures the proportion between the market price for a share and the book value per share.

Book value formula stock. How to calculate book value. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company.

To find the equity you should subtract the company s liabilities from its assets. It s calculated by dividing the company s stock price per share by its book value per share bvps. Here s the formula of price to book value price to book value ratio market price per share book value per share.

When compared to the current market value per share the book value per share can provide information on how a company s stock is valued. The formula for book value per share requires three variables. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity.

The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders. Total equity preferred equity and total outstanding shares. The book value per share is the minimum cash value of a company and its equity for common shareholders.

Book value total common shareholders equity preferred stock number of outstanding common shares. The stock price per share can be found as the amount listed as such through the secondary stock market. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes.

The formula for price to book value is the stock price per share divided by the book value per share. The formula states that the numerator part is what the firm receives by the issuance of common equity and that figure increases or decreases depending upon the company is making profit or loss and then finally it decreases by issuing dividend and preference stock. If the value of bvps exceeds the market value per share the.