Book Value Per Share Common Stock

Book value per share is usually used to compute the value or price per share of.

Book value per share common stock. Dividing that 1 billion by the 100 million outstanding shares gives us a per share book value of 10. Book value per share of common stock is the amount of net assets that each share of common stock represents. 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.

The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. What does book value per share mean. The book value per common share is a financial ratio that calculates amount of equity applicable to each outstanding common stock.

This figure represents the minimum value of a company s. 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 share is a fairly conservative way to measure a stock s value.

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. If the value of bvps exceeds the market value per share the. 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.

This article is focused on its calculation. Finally we divide the current share price of 15 by that 10 to reach a price to book. Some stockholders have keen interest in knowing the book value of the shares they own.

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. 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 formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding.