Book Value Per Share Good

In other words this measures a company s total assets minus its total liabilities on a per share basis.

Book value per share good. The price to book p b ratio has been favored by value investors for decades and is widely used by market analysts. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Measuring risk is important to any portfolio and should be done carefully because profits are good but being safe from risk is also just as good.

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. Strictly speaking the higher the book value the more the share is worth. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions.

So higher book value means the shares have more liquidation value. Book value per share is a fairly conservative way to measure a stock s value. Book value per share could also be a way to measure the potential risk.

Dividing that 1 billion by the 100 million outstanding shares gives us a per share book value of 10. 15 000 000 stockholders equity 3 000 000 preferred stock 2 000 000 average shares outstanding 6 00 book value per share problems with book value per share. The calculation of its book value per share is.

Traditionally any value under 1 0 is considered a good p b value indicating a. Use of book value per share. Finally we divide the current share price of 15 by that 10 to reach a price to book.

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. If you determine a book value to be 10 and the stock is trading above the book value you could use that as a stop loss. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s.