Book Value Of Equity Example

What does book value of equity mean.

Book value of equity example. 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. Based on the above formula calculation of book value of equity of rsz ltd can be done as 5 000 000 200 000 3 000 000 700 000 8 900 000 therefore the company s common equity is 8 900 000 as on the balance sheet date. It is equal to the price per share divided by the book value per share.

This amount includes common stock retained earnings and other equity. In the above financial statement book value of equity is us 134 05 billion as highlighted. Or book value shareholder s equity broadly equity share capital reserves and surpluses market value market price per share no.

Of equity shares outstanding. The price to book p b ratio is a popular way to compare market value and book value. Equity is the total value of all shares issued by a company and the value of all earnings that the company has retained.

You can find these figures on the balance sheet. Book value is the company s total assets minus its liabilities and intangible assets. Book value of equity also known as shareholder s equity is a firm s common equity that represents the amount available for distribution to shareholders.

If we apply it to the formula book value of equity total assets total liabilities. For example a company has a p b of. Assume there is a company x whose publicly traded stock price is 20 and it has 100 000 outstanding equity shares.

The book value of equity is equal to total assets minus total liabilities preferred stocks and intangible assets. Stock 1 has a high market capitalization relative to its net book value of assets so its price to book ratio is 3 9x. Stock 2 has a lower market cap than its book value of equity so its market to book ratio is 0 9x.