How Do You Compute Book Value Per Share

Roe is net income divided by stockholder s equity.

How do you compute book value per share. To calculate the book value per share you must first calculate the book value then divide by the number of common shares. Otherwise the book value per share would be inflated and inaccurate. The bvps can gauge whether a stock is undervalued or overvalued by using a snapshot of its current common equity and shares outstanding.

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. 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 bvps is calculated by dividing a company s common equity.

In our example 80 000 divided by 50 000 shares equals a book value per share of common stock of 1 60. Based on the above formula calculation of book value of equity of rsz ltd can be done as 5 000 000 200 000 3 000 000 700 000. Do the calculation of book value of equity of the company based on the given information.

Divide the available equity by the common shares outstanding to determine the book value per share of common stock. What is the book value per share bvps. Book value per share total common stockholders equity preferred stock number of common shares.

Net income on a per share basis is referred to as eps or earnings per share. 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.