Book Value Calculation Example

Book value or carrying value could be defined as the net worth of an asset that is recorded on the balance sheet and it is simply calculated by subtracting any accumulated depreciation from an asset s purchase price or the historical cost.

Book value calculation example. Say that medtronic nyse. The company has the policy to depreciate all assets annually using the straight line method of depreciation. Book value may also be.

You can use this book value calculator. Book value per share bvps is a measure of value of a company s common share based on book value of the shareholders equity of the company. 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.

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. How book value of assets works. Net book value calculation example let s assume that the company jack ltd purchased plant and machinery on january 1 2011 worth 800 000 having a useful life of 10 years.

It is the amount that shareholders would receive if the company dissolves realizes cash equal to the book value of its assets and pays liabilities at their book value. We enter our numbers as. Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis.

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. 33 34 13 52 2 5 times book value. What these numbers mean.

Usually an assets book value is the current value of the asset with respect to the asset s useful life. Book value per share will be bvps 495 61 book value calculator. Calculating book value example 2.