Book Value Per Share Good
Strictly speaking the higher the book value the more the share is worth.
Book value per share good. The calculation of its book value per share is. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. Dividing that 1 billion by the 100 million outstanding shares gives us a per share book value of 10.
Traditionally any value under 1 0 is considered a good p b value indicating a. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. So higher book value means the shares have more liquidation value.
In other words this measures a company s total assets minus its total liabilities on a per share basis. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. Book value per share is a fairly conservative way to measure a stock s value.
Use of book value per share. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. The price to book p b ratio has been favored by value investors for decades and is widely used by market analysts.
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 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.
If you determine a book value to be 10 and the stock is trading above the book value you could use that as a stop loss. Measuring risk is important to any portfolio and should be done carefully because profits are good but being safe from risk is also just as good. 15 000 000 stockholders equity 3 000 000 preferred stock 2 000 000 average shares outstanding 6 00 book value per share problems with book value per share.