Book Value Per Share Ratio

The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s.

Book value per share ratio. Be sure to use the average number of shares since the period end amount may incorporate a recent stock buyback or issuance which will skew the results. The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity.

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. It indicates the level of safety associated with each common share after removing the effects of liabilities. Clorox book value per share analysis book value per share b s is can be calculated by subtracting liabilities from assets and then dividing it by the total number of currently outstanding shares.

Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. In this equation book value per share is calculated as follows. 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 formula is used to calculate the per share value of a company based on its equity available to common shareholders. We first subtract the total liabilities from the total assets and divide the difference by the total number of shares outstanding on that date. Total assets total liabilities number of shares outstanding.

In other words this measures a company s total assets minus its total liabilities on a per share basis. Unlike the pb ratio the mb formula compares values on a company wide basis. It indicates the level of safety associated with each common share after removing the effects of liabilities.

The book value per share is a little more complicated. The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.