Book Value Per Common Share
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.
Book value per common share. After such modification we get the following widely used formula to calculate book value per share. This figure represents the minimum value of a company s. If company has issued common as well as preferred stock.
Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by the number of common shares. To find the equity you should subtract the company s liabilities from its 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.
The formula for book value per share requires three variables. Book value per common share or simply book value per share bvps is a method to calculate the per share book value of a company based on common shareholders equity in the company. What is the book value per share bvps.
Book value per common share is calculated by dividing the stockholders equity applicable to common shareholders by the number of outstanding common shares. 1 776 000 100 000 shares 17 76 per share of common stock 2. The book value per share is the minimum cash value of a company and its equity for common shareholders.
Book value per share conclusion. Book value per share total common stockholders equity preferred stock number of common shares. Notice the only the equity applicable to common shareholders is used.
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. Calculate book value per share from the following stockholders equity section of a company. 15 million stockholders equity 3 million preferred stock 2 million average shares outstanding 6 book value per share.