Book Value Per Common Share Ratio
In other words this is the equity value of each common stock.
Book value per common share ratio. For example if the bvps is 20 per share and the market value of the same common share is 30 per share the investor can find out the ratio of price to book value as price book value 30 20 1 5. Book value per share bvps is a ratio used to compare a firm s common shareholder s equity to the number of shares outstanding. It indicates the level of safety associated with each common share after removing the effects of liabilities.
Book value per share is usually used to compute the value or price per share of. What is book value per share bvps. The information needed to calculate bvps is found on a company s balance sheet.
Book value per share is a ratio that compares the net asset value of a company minus preferred equity to the total number of common shares available on the market. 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. Comparing bvps to a stock s market price could help value investors find opportunities.
Book value of equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares. The book value per common share is a financial ratio that calculates amount of equity applicable to each outstanding common stock. 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.
In the case that the firm dissolves it is the amount the shareholders will receive. If the investors can find out the book value of common stocks she would be able to figure out whether the market value of the share is worth it. 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.
The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. Book value per share b s is can be calculated by subtracting liabilities from assets and then dividing it by the total number of currently outstanding shares. 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.