Book Value Per Share Accounting Tools

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 accounting tools. The book value of that company would be calculated simply as 25 million 100m 75m. Example of book value per share. In simple terms it would be the amount of money that a share holder would get if a company were to liquidate.

The market value per share represents the current price of a company s shares and it is the price that investors are willing to pay for common stocks. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. The calculation of its book value per share is.

The book value per share may be used by some investors to determine the equity in a company relative to the market value of the company which is the price of its stock. The information needed to calculate bvps is found on a company s balance sheet. Abc international has 15 000 000 of stockholders equity 3 000 000 of preferred stock and and an average of 2 000 000 shares outstanding during the measurement period.

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. It is especially true when used to help give value to a company either for the company s own accounting records if the company is considering liquidation or if another company is considering taking over the business. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity.

Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. Problems with book value per share. To calculate tangible book value we must subtract the balance sheet value of intangibles from common equity and then divide the result by shares outstanding.

If there are 10 million shares outstanding each share would represent 2 50 of book value. Comparing bvps to a stock s market price could help value investors find opportunities. Sterling tools book value.