Book Value Of Common Stock Formula

The book value per share is the minimum cash value of a company and its equity for common shareholders.

Book value of common stock formula. Book value total common shareholders equity preferred stock number of outstanding common shares. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. Total equity preferred equity and total outstanding shares.

The book value per common share formula below is an accounting measure based on historical transactions. The formula for book value per share requires three variables. To find the equity you should subtract the company s liabilities from its assets.

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. Roe is net income divided by stockholder s equity. Book value per share stockholder s equity total number of outstanding common stock.

For example if there are 10 000 outstanding common shares of a company and each share has a par value of 10 then the value of outstanding share amounts to 100 000. 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 share conclusion.

The formula for calculating the book value per share of common stock is. Bvps frac total shareholder equity preferred equity total outstanding. What is the book value per share bvps.

Common stock can be calculated using the formula given below common stock total equity preferred stock additional paid in capital retained earnings treasury stock common stock 1 000 000 300 000 200 000 100 000 100 000 common stock 500 000. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. Book value may also be.