Book Value Formula In Finance
To calculate the book value of a company you subtract the value of its total liabilities and intangible assets from the value of its total assets.
Book value formula in finance. Value 300 000 240 000 60 000. The book value figure is typically viewed in relation to the company s stock value market capitalization market capitalization market capitalization market cap is the most recent market value of a company s outstanding shares. Stock 1 has a high market capitalization relative to its net book value of assets so its price to book ratio is 3 9x.
The net book value of the machinery as on december 31 st 2019 is 60 000. The book value per share is the minimum cash value of a company and its equity for common shareholders. For the initial outlay of an investment.
To calculate the book value of an asset you subtract its accumulated depreciation from its original cost. Book value is also the tangible net asset value of a company calculated as total assets minus intangible assets e g. Patents goodwill and liabilities.
The formula for price to book value is the stock price per share divided by the book value per share. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity. How to calculate book value.
Book value may also be. The price to book ratio formula sometimes referred to as the market to book ratio is used to compare a company s net assets available to common shareholders relative to the sale price of its stock. Net book value analysis.
The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders. To find the equity you should subtract the company s liabilities from its assets. The formula for book value per share requires three variables.