Book Value Per Share How To Calculate

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.

Book value per share how to calculate. The book value per share is the amount of the assets that will go to common equity in the event of liquidation. Shareholder s equity can be obtained by subtracting company s liabilities from its assets. The book value per share is the minimum cash value of a company and its equity for common shareholders.

As shown at the top of this page book value per share is expressing stockholder s equity on a per share basis. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. In this equation book value per share is calculated as follows.

Also since you re working with common shares you must subtract the preferred shareholder equity from the total equity. Net income on a per share basis is referred to as eps or earnings per share. Book value per share growth is a reliable tool to forecast future performance.

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. The second way is to divide company s current stock price with its book value per share. 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.

To calculate book value per share or bvps you need to divide shareholder s equity by average number of common stocks. Otherwise the book value per share would be inflated and inaccurate. Book value per share total common stockholders equity preferred stock number of common shares.

To calculate the book value per share you must first calculate the book value then divide by the 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. To find the equity you should subtract the company s liabilities from its assets.