Book Value Of Shareholders Equity Formula
Shareholders equity may be calculated by subtracting its total liabilities from its total assets both of which are itemized on a company s balance sheet.
Book value of shareholders equity formula. How to calculate shareholders equity. Total equity preferred equity and total outstanding shares. Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares.
Calculate book value of equity by subtracting a firm s total liabilities from its total assets to arrive at stockholders equity. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. It is calculated by multiplying a company s share price by its number of shares outstanding whereas book value or shareholders equity is simply the difference between a company s assets and liabilities.
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. You can find these figures on the balance sheet. To find the equity you should subtract the company s liabilities from its assets.
The formula for book value per share requires three variables. The formula for book value per share book value of equity total number of outstanding shares taking above example of apple inc we can calculate the book value per share as follows. Book value per share us 134 05 billion 5 126 billion shares us 26 15.
Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. 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. For healthy companies equity value far exceeds book value as the market value of the company s shares appreciates over the years.
The book value per share is the minimum cash value of a company and its equity for common shareholders.