Book Value Per Share Basic Or Diluted

Unor college of business and accountancy.

Book value per share basic or diluted. For example an employee with a vested option to buy stock at 1 per share won t exercise that option when the stock is trading at 0 75 per share. 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. In other words this measures a company s total assets minus its total liabilities on a per share basis.

Underwater stock options aren t included in the diluted eps calculation only stock options that are eligible for conversion and have a strike price below the current market price. Cash eps is the. Carry value or book value eps is the real cash worth of each share of company stock.

Both basic and diluted eps are measures of profitability basic eps is calculated by simply dividing the net income after deducting the preferred dividend which is then divided by the total number of outstanding shares on the other hand diluted eps takes into consideration impact of convertible securities like convertible debt and is calculated as net income minus preferred dividends divided by the summation of weighted average outstanding shares and the total of all the converted securities. Securities are considered as dilutive when their conversion to equity would result in decrease of net profit per share. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions.

Book value per share is a fairly conservative way to measure a stock s value. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. The amount that would be paid on.

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. If conversion of a security results in increase in net profit per share then it is considered an anti dilutive and not considered in the calculation of diluted eps. Book value per share total common stockholders equity preferred stock number of common shares.

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. The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. Book value per share basic earnings per share and diluted earnings per share 17 september 2016 book value per share definition and formula accounting procedures preference as to assets preference as to dividends.