Book Value Per Share From Balance Sheet

Conceptually book value per share is similar to net worth meaning it is assets minus debt and may be looked at as though what would occur if operations were to cease.

Book value per share from balance sheet. The price to book ratio p b is one way to evaluate a stock s value something that may be important if you re looking. Comparing bvps to a stock s market price could help value investors find opportunities. Book value per share is a ratio that compares the net asset value of a company minus preferred equity to the total number of common shares available on the market.

Calculate the firm s stock price book value from the balance sheet. Divide the firm s total common stockholder s equity by the average number of common shares outstanding. Market price of a stock is different from it s book value.

Stock buyback can reduce bvps if market price at which stock is repurchased is higher than the current book value per share. Return per share stable return on equity cost of equity book value of equity per. Book value is the net value of a firm s assets found on its balance sheet and it is roughly equal to the total amount all shareholders would get if they liquidated the company.

For example if the firm s total common stockholder s equity is 6 3 million and the average number of common shares outstanding is 100 000 then the stock price s book value for the firm would be 63. The second way is to divide company s current stock price with its book value per share. This means book value per share of common stock is the amount of money each share would receive based on the balance sheet if the company is liquidated today.

When calculating the book value per share of a company we base the calculation on the common stockholders equity stockholders equity stockholders equity also known as shareholders equity is an account on a company s balance sheet that consists of share capital plus and the preferred stock should be excluded from the value of equity. With reference to the balance sheet above for xyz corporation let s assume that the current market price of the stock is 70 and book value per share is calculated as 10 then price to book value will be equal to 7. A guide for investors smartasset via yahoo finance 5 months ago.

For example enterprise value would look at the market value of the company s equity plus its debt whereas book value per share only looks at the equity on the balance sheet. The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company.