How To Compute Book Value Of Equity

Calculate book value of equity by subtracting a firm s total liabilities from its total assets to arrive at stockholders equity.

How to compute book value of equity. This means if the company dissolves the shareholders will receive an amount per share as per book value per share. Alternatively the investors can also look at shareholders equity to find out the book value directly. There are several variations on how to compute the book value of equity which are.

Doing this allows investors to find out the actual value at a certain point in time. The best and most common way to find out the book value of the company is to deduct the total liabilities from the total assets. Book value total common shareholders equity preferred stock number of outstanding common shares.

How to calculate book value. The formula states that the numerator part is what the firm receives by the issuance of common equity and that figure increases or decreases depending upon the company is making profit or loss and then finally it decreases by issuing dividend and preference stock. For example in apple s 1q report released february 1 2018 the company reported total assets of 406 794 billion and liabilities of 266 595 billion.

Assets are worth less if they must be liquidated in the short term and worth more if the seller can maximize the sale price over the long term. You can find these figures on the balance sheet. Therefore the company s common equity is 8 900 000 as on the balance sheet date.

The formula for book value per share book value of equity total number of outstanding shares.