Book Value Per Share Analysis
Comparing bvps to a stock s market price could help value investors find opportunities.
Book value per share analysis. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. While book value per share is a good way to evaluate a stock it s more of an accounting based tool and doesn t necessarily reflect the true market value of a publicly traded company companies. If book value per share is calculated with just common stock in the denominator then it results in a measure of the amount that a common shareholder would receive upon liquidation of the company.
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. Book value per share conclusion. The information needed to calculate bvps is found on a company s balance sheet.
Total assets total liabilities number of shares outstanding. Net working capital per share. Market value per share is obtained by simply looking at the.
Fair market value of assets per share. 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. If the value of bvps exceeds the market value per share the.
The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. This is important because if you invest in companies that are not stable and may be speculative you want to know how much you will potentially receive should the company go under. The formula for book value per share requires three variables.
In this equation book value per share is calculated as follows. Net asset cost per share. Book value per share will help people who own the share determine the value of their shares if the company should close and liquidate their assets and paying anyone they owe money too.