Book Value Of Stock

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 of stock. The stock price per share can be found as the amount listed as such through the secondary stock market. The book value per share is considered to be the total equity for common stockholders which can be found on a company s balance sheet. If you look up any balance sheet you will find that it is divided in 3 sections.

If you want to compare companies you can convert to book value per share which is simply the book value divided by the number of outstanding shares. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Other components of investing.

Book value total common shareholders equity preferred stock number of outstanding common shares. 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. Assets liabilities and shareholders equity.

Why book value is useful the primary advantage of using book. 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. Using book value in investing book value appeals more to value investors who look at the relationship to the stock s price by using the price to book ratio.

Often book value is expressed on a per share basis dividing the total shareholder equity by the number of shares of stock outstanding. The book value of a stock book value of total assets total liabilities. The formula for price to book value is the stock price per share divided by the book value per share.

The book value calculation in practice is even simpler.