Book Value Per Share Zhongwen
The book value per share is calculated using historical costs but the market value per share is a forward looking metric that takes into account a company s earning power in the future.
Book value per share zhongwen. What is book value per share bvps. 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. Book value per share is the ratio of shareholders equity to the average ordinary shares common stock outstanding.
That is the amount that ordinary shareholders will receive when the company is liquidated. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares.
When calculating the book value per share of a company we base the calculation on the common stockholders equity stockholders equity stockholders equity also known as shareholders equity is an account on a company s balance sheet that consists of share capital plus and the preferred stock should be excluded from the value of equity. It is because preferred stockholders are ranked higher than common stockholders during liquidation. For example suppose you have 1 000 shares of a company and the book value per share is rp5.
Understanding book value per share. 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.