Book Value Per Share Formula With Example

The price to book value ratio p b formula is also referred to as a market to book ratio and measures the proportion between the market price for a share and the book value per share.

Book value per share formula with example. Book value per share stockholder s equity total number of outstanding common stock for example if there are 10 000 outstanding common shares of a company and each share has a par value of 10 then the value of outstanding share amounts to 100 000. Shareholders equity preferred shares. Book value per share shareholders equity preferred equity total outstanding common shares.

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 formula example 3. 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.

Book value per share 1 25 000 5 000. Book value per share 25. If the value of bvps exceeds the market value per share the.

We can apply the values to our variables and calculate the 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. The formulas and examples for calculating book value per share with and without preferred stock are given below.

The formula for calculating the book value per share of common stock is. Book value per share. Book value per share 1 50 000 25 000 5 000.

In this video on book value per share of common stock we look at the book value per share formula and calculate bvps along with practical examples. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares. Total outstanding shares total number of shares issued shares as treasury stock.