Book Value Per Ordinary Share Calculation

Now by using the below formula we can calculate book value per share.

Book value per ordinary share calculation. To calculate the book value per share you must first calculate the book value then divide by the number of common shares. Also since you re working with common shares you must subtract the preferred shareholder equity from the total equity. Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis.

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. It is the amount that shareholders would receive if the company dissolves realizes cash equal to the book value of its assets and pays liabilities at their book value. Roe is net income divided by stockholder s equity.

At the same time we use book value in the case of roe formula when we calculate the roe per share. Book value per share stock holders equity preferred stock total outstanding shares 2000000 500000 300000 1500000 300000 5. This figure represents the minimum value of a company s.

Book value per common share bvps calculates the common stock per share book value of a firm. Otherwise the book value per share would be inflated and inaccurate. If the value of bvps exceeds the market value per share the.

The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Book value per share bvps is a measure of value of a company s common share based on book value of the shareholders equity of the company. In other words it is the share nominal amount 1 0 1 or 0 001 mentioned on the stock.

Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares. Book value per share of jagriti group of companies is 47 14. For example if the bvps is 20 per share and the market value of the same common share is 30 per share the investor can find out the ratio of price to book value as price book value 30 20 1 5.