Book Value Per Ordinary Share Formula

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.

Book value per ordinary share formula. You just divide the book value of shareholders equity by the average outstanding ordinary 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. Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by the number of common shares.

Where common stock at par par value number of shares issued. Additional paid in capital number of shares amount at which shares issued par value retained earning net income dividend. Book value per share total common stockholders equity preferred stock number of common shares.

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 common share formula below is an accounting measure based on historical transactions. Book value par value additional paid in capital retained earning.

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. If the value of bvps exceeds the market value per share the. The calculation is easy.

Book value per share total equity preferred shares average of outstanding ordinary shares. Book value per share stock holders equity preferred stock total outstanding shares 2000000 500000 300000 1500000 300000 5. In order to make a proper valuation of right relating to right shares the market value of the old holdings and the total issue price of the new holdings must be added and the same must be divided by the total number of new and old holdings.

You can find the numbers in the owner s equity of the balance sheet. Here is the formula. Book value per ordinary share solution.