Book Value Per Share Is Quizlet

What is the definition of book value per shares.

Book value per share is quizlet. Divide the available equity by the common shares outstanding to determine the book value per share of common stock. Book value per share is based on the number of outstanding common shares which is reduced by the acquisition of treasury stock the denominator is reduced. Book value per share has increased.

Book value per share is 10. Problems with book value per share. What does book value per share mean.

The numerator book value is also reduced by the cost to purchase the shares but the overall effect on the ratio is an increase in book value per share. The new book value per share is. The firm purchases 20 shares of treasury stock for 8 less than book value.

It also has 2 million in face value of debt that trades at 90 of par. The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. 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.

Company x has 2 million shares of common stock outstanding at a book value of 2 per share. Example of book value per share. In other words this measures a company s total assets minus its total liabilities on a per share basis.

Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares. In our example 80 000 divided by 50 000 shares equals a book value per share of common stock of 1 60. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions.