Book Value Per Share With Example

Ashley has invested in a soda company that is rising in popularity throughout the midwest.

Book value per share with example. Book value per share example. Using the previous example assume that the company repurchases 500 000 common stocks from its shareholders. Total outstanding shares total number of shares issued shares as treasury stock.

Book value per share is a fairly conservative way to measure a stock s value. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares. The presence of preferred stock in the total stockholders equity however has a significant impact on the calculation.

Shareholders equity preferred shares. Example of how to use book value of equity per share assume for example that xyz manufacturing s common equity balance is 10 million and that 1 million shares of common stock are outstanding. Ashley looks at their stock chart and finds their equity is 9 6 million.

Use of book value per share 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. 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. Mostly the book value is calculated for common stock only.

The revised bvps will be as follows. Total number of outstanding shares. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s.

One of the main ways of increasing the book value per share is to buy back common stocks from shareholders. As a common shareholder she wants to know the minimum equity that she would have a claim on. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity.