Net Book Value Ratio Formula
How to calculate net book value let s say abc trucking company purchases a semi truck for 100 000 and it has depreciated 7 000 each year for five years.
Net book value ratio formula. Share price net book value per share. Here s the formula of price to book value price to book value ratio market price per share book value per share. Alternatively book value can be calculated as the sum total of the overall shareholder equity of the company.
Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. The market to book ratio is calculated by dividing the current closing price of the stock by the most current quarter s book value per share. Significance of net book value.
It also helps in calculating the different financial ratio. Market price per share book value per share. The market to book formula is.
Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. This means the net book value of the truck would be 65 000 after five years. There are certain drawbacks of net book value.
Net book value cost of the asset accumulated depreciation. Market to book ratio formula. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.
Market capitalization net book value. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. How is net book value calculated.