Book Value Of Stockholders Equity Formula

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. 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.

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Book Value Of Equity Meaning Formula Calculation Limitation P B Ratio

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For healthy companies equity value far exceeds book value as the market value of the company s shares appreciates over the years.

Book value of stockholders equity formula. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Book value per share represents equity of the firm on per share basis.

The formula for book value per share book value of equity total 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.

Stockholders equity aka shareholders equity is the accounting value book value of stockholders interest in a company. Keep in mind the shareholders interest is a residual one. 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.

This means if the company dissolves the shareholders will receive an amount per share as per book value per share. You can find these figures on the balance sheet. 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.

The book value of equity is equal to total assets minus total liabilities preferred stocks and intangible assets. 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.