Book Value Per Share Calculation Example

In contrast to book value the market price reflects the future growth potential of the company. Shareholders equity preferred shares. In the above example we know both.

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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 per share calculation example. Yahoo finance provided a per share book value of 13 52. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares. Price to book value ratio of citigroup.

Book value 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. Book value per share 1 25 000 5 000.

We enter our numbers as. Bvps dfrac 9 600 000 3 090 000 61 500 000 0 11. Book value per share formula example 3.

Book value per share 1 50 000 25 000 5 000. At the same time we use book value in the case of roe formula when we calculate the roe per share. 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.

Mdt closed at 33 34. Given stock holders equity 2000000 preferred stock 500000 total outstanding shares 300000. 33 34 13 52 2 5 times book value.

Say that medtronic nyse. Using the p b ratio formula we get p b ratio formula market price per share book value per share. This example is referred to as price to book value p b in which book value per share is used in the denominator.