Book Value Per Share Ratio Formula

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 ratio formula. The equity is the total number of assets after liabilities are subtracted. Book value per share total common stockholders equity preferred stock number of common shares. 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.

Unlike the pb ratio the mb formula compares values on a company wide basis. 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. The information needed to calculate bvps is found on a company s balance sheet.

Formula and calculation of p b ratio. Comparing bvps to a stock s market price could help value investors find opportunities. 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.

Total assets total liabilities number of shares outstanding. Many investors rephrase this equation to form the book to market ratio formula by dividing the total book value of the firm by the total market value of the company. Earnings per share ratio eps ratio is computed by the following formula.

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. The book value per common share formula below is an accounting measure based on historical transactions. Book value per share is a ratio that compares the net asset value of a company minus preferred equity to the total number of common shares available on the market.

The price to book value ratio p b formula is also referred to as a market to book ratio and measures the proportion between the market price for a share and the book value per share. Outstanding the formula requires you to know the company s total equity. The numerator is the net income available for common stockholders i e net income less preferred dividend and the denominator is the average number of shares of common stock outstanding during the year.