Book Value Per Share Quizlet

It also has 2 million in face value of debt that trades at 90 of par.

Book value per share quizlet. In other words this measures a company s total assets minus its total liabilities on a per share basis. Book value per share bvps is a ratio used to compare a firm s common shareholder s equity to the number of shares outstanding. In the example 100 000 minus 20 000 equals 80 000 of available equity.

Book value per share has increased. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. 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 new book value per share is. Company x has 2 million shares of common stock outstanding at a book value of 2 per share. What is the definition of book value per shares.

Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. Assume that the total owners equity and number of shares before the treasury stock purchase is 4 000 and 400 respectively. If 10 shares were repurchased for 8 which is less than the original book value per share the new book value would be 920 and the reduced number of shares would be 90 thus resulting in a new book value per common share of 10 22 which is larger than the original 10.

What is book value per share bvps. The firm purchases 20 shares of treasury stock for 8 less than book value. 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.

The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. Divide the available equity by the common shares outstanding to determine the book value per share of common stock. 4 000 160 380 10 11.