Calculation Of Book Value Of Equity Shares

The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.

Calculation of book value of equity shares. Divide 35 million by 1 4 million shares for a book value per share of 25. Therefore the calculation of book value per share will be as follows bvps total common shareholders equity preferred stock number of outstanding common shares 2 93 491 00 cr 592 18 cr. The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company.

It is calculated by multiplying a company s share price by its number of shares outstanding whereas book value or shareholders equity is simply the difference between a company s assets and liabilities. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. Roe is net income divided by stockholder s 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 can be useful to compare the market price of shares to the book value. Suppose a company has a book value of 35 million and there are 1 4 million common shares outstanding.

Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis. As shown at the top of this page book value per share is expressing stockholder s equity on a per share basis. Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares.

The book value of equity is equal to total assets minus total liabilities preferred stocks and intangible assets. You can use this book value calculator. To make this easier convert total book value to book value per share.

Here is the formula. So you have to deduct the total shareholder equity with preferred shares. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes.