Book Value Per Share Is Quizlet

Book value per share is based on the number of outstanding common shares which is reduced by the acquisition of treasury stock the denominator is reduced.

Book value per share is quizlet. Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. What does book value per share mean. In the case that the firm dissolves it is the amount the shareholders will receive.

Abc international has 15 000 000 of stockholders equity 3 000 000 of preferred stock and and an average of 2 000 000 shares outstanding during the measurement period. Problems with book value per share. The numerator book value is also reduced by the cost to purchase the shares but the overall effect on the ratio is an increase in book value per share.

The stock trades for 3 per share. Book value per share is 10. The firm purchases 20 shares of treasury stock for 8 less than book value.

Book value per share has increased. In our example 80 000 divided by 50 000 shares equals a book value per share of common stock of 1 60. The new book value per share is.

The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. In other words this measures a company s total assets minus its total liabilities on a per share basis. 15 000 000 stockholders equity 3 000 000 preferred stock 2 000 000 average shares outstanding 6 00 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. Company x has 2 million shares of common stock outstanding at a book value of 2 per share. What is the definition of book value per shares.