Book Value Per Share How To Calculate

In this equation book value per share is calculated as follows.

Book value per share how to calculate. To calculate the book value per share you must first calculate the book value then divide by the number of common shares. The second way is to divide company s current stock price with its 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.

To find the equity you should subtract the company s liabilities from its assets. Shareholder s equity can be obtained by subtracting company s liabilities from its assets. The formula for book value per share requires three variables.

Book value per share is also used in the return on equity formula or roe formula when calculating on a per share basis. Book value per share total common stockholders equity preferred stock number of common shares. Market value per share is obtained by simply looking at the.

Roe is net income divided by stockholder s equity. Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by the number of common shares. Higher book value means the shares have more liquidation value.

The higher the book value the more the share is worth. To calculate book value per share or bvps you need to divide shareholder s equity by average number of common stocks. Also since you re working with common shares you must subtract the preferred shareholder equity from the total equity.

With reference to the balance sheet above for xyz corporation let s assume that the current market price of the stock is 70 and book value per share is calculated as 10 then price to book value will be equal to 7. Total equity preferred equity and total outstanding shares. The book value per share is the amount of the assets that will go to common equity in the event of liquidation.