Book Value Per Share Accounting Tools

Book value is the accounting value of the company s assets less all claims senior to common equity such as the company s liabilities.

Book value per share accounting tools. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. In simple terms it would be the amount of money that a share holder would get if a company were to liquidate. 15 000 000 stockholders equity 3 000 000 preferred stock 2 000 000 average shares outstanding 6 00 book value per share.

The market value per share represents the current price of a company s shares and it is the price that investors are willing to pay for common stocks. Comparing bvps to a stock s market price could help value investors find opportunities. The book value of that company would be calculated simply as 25 million 100m 75m.

For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. If there are 10 million shares outstanding each share would represent 2 50 of book value. The information needed to calculate bvps is found on a company s balance sheet.

Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. To calculate tangible book value we must subtract the balance sheet value of intangibles from common equity and then divide the result by shares outstanding. Example of book value per share.

Sterling tools book value. The book value per share and the market value per share are some of the tools used to evaluate the value of a company s stocks. The calculation of its book value per share is.

What is the difference between book value and continue reading book value per share. Problems with book value per share. It is especially true when used to help give value to a company either for the company s own accounting records if the company is considering liquidation or if another company is considering taking over the business.