Book Value Per Share Of Common Stock Formula
The formula for book value per share requires three variables.
Book value per share of common stock formula. The formula for calculating the book value per share of common stock is. Book value per share total common stockholders equity preferred stock number of common shares. The book value per common share formula below is an accounting measure based on historical transactions.
If the value of bvps exceeds the market value per share the. 1 776 000 100 000 shares 17 76 per share of common stock 2. 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.
Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares. Now by using the below formula we can calculate book value per share.
Total equity preferred equity and total outstanding shares. To find the equity you should subtract the company s liabilities from its assets. 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.
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. After such modification we get the following widely used formula to calculate book value per share.
Roe is net income divided by stockholder s equity. Calculate book value per share from the following stockholders equity section of a company. If company has issued common as well as preferred stock.