Book Value Per Common Share Meaning

Comparing bvps to a stock s market price could help value investors find opportunities.

Book value per common share meaning. Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares. 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 book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.

The information needed to calculate bvps is found on a company s balance sheet. In the case that the firm dissolves it is the amount the shareholders will receive. The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding.

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. Book value per share bvps is a ratio used to compare a firm s common shareholder s equity to the number of shares outstanding. If book value per share is calculated with just common stock in the denominator then it results in a measure of the amount that a common shareholder would receive upon liquidation of the company.

The book value per common share is a financial ratio that calculates amount of equity applicable to each outstanding common stock. Book value per share is a fairly conservative way to measure a stock s value. Since preferred stockholders have a higher claim on assets and earnings than common shareholders preferred equity is subtracted from shareholder s equity to derive the equity available to common shareholders.

In other words this is the equity value of each common stock. Book value per common share calculates the per share value of a company based on common shareholders equity in the company. 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.

Book value per common share or simply book value per share bvps is a method to calculate the per share book value of a company based on common shareholders equity in the company. Book value per share is usually used to compute the value or price per share of. What is the book value per share bvps.