Book Value Per Share Of Common Stock
The formula for calculating the book value per share of common stock is.
Book value per share of common stock. 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. Some stockholders have keen interest in knowing the book value of the shares they own. 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.
The book value per share is the minimum cash value of a company and its equity for common shareholders. The formula for book value per share requires three variables. A market value of common stock b total assets c stockholders equity plus preferred stock d total common stockholders equity.
The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Book value per share stockholder s equity total number of outstanding common stock for example if there are 10 000 outstanding common shares of a company and each share has a par value of 10 then the value of outstanding share amounts to 100 000. The calculation of its book value per share is.
This article is focused on its calculation. Book value per share of common stock is the amount of net assets that each share of common stock represents. Finally we divide the current share price of 15 by that 10 to reach a price to book.
If the value of bvps exceeds the market value per share the. This amount applies if a company disbands and liquidates its assets and uses the assets pay off liabilities the remaining amount goes to the common shareholders. What is book value.
15 million stockholders equity 3 million preferred stock 2 million average shares outstanding 6 book value per share. D total common stockholders equity. The book value per share of common stock is calculated by dividing by the number of shares outstanding.