Book Value Per Share Accounting

Home accounting dictionary what is book value per share bvps.

Book value per share accounting. The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. Book value is the accounting value of the company s assets less all claims senior to common equity such as the company s liabilities. Book value per share is a fairly conservative way to measure a stock s value.

In the case that the firm dissolves it is the amount the shareholders will receive. In other words this measures a company s total assets minus its total liabilities on a per share basis. 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.

If all of the assets were sold off and all of the liabilities were paid off the shareholders would be left with the equity. 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. What is the difference between book value and continue reading book value per share.

The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. Book value per share is usually used to compute the value or price per share of a company s stock during liquidation.

Be sure to use the average number of shares since the period end amount may incorporate a recent stock buyback or issuance which will skew the results. This makes sense because equity represents the net assets of a business. The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding.

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. 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 equity per share bvps is the ratio of equity available to common shareholders divided by the number of outstanding shares.