Book Value Per Share Example

The book value per share may be used by some investors to determine the equity in a company relative to the market value of the company which is the price of its stock.

Book value per share example. The formulas and examples for calculating book value per share with and without preferred stock are given below. Mostly the book value is calculated for common stock only. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares.

Example of how to use book value of equity per share assume for example that xyz manufacturing s common equity balance is 10 million and that 1 million shares of common stock are outstanding. The presence of preferred stock in the total stockholders equity however has a significant impact on the calculation. Total number of outstanding shares.

One of the main ways of increasing the book value per share is to buy back common stocks from shareholders. It will reduce the current shares outstanding to 2 5 million 3 000 000 500 000. Using the previous example assume that the company repurchases 500 000 common stocks from its shareholders.

As a common shareholder she wants to know the minimum equity that she would have a claim on. Indian stock market the book value is per share value i e. The calculation of its book value per share is.

For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. Book value is the total amount of company s physical assets excluding patents goodwill minus liabilities. Abc international has 15 000 000 of stockholders equity 3 000 000 of preferred stock and and an average of 2 000 000 shares outstanding during the measurement period.

Book value per share example. Book value per share. 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.