Book Value Per Share Meaning
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 meaning. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity. Book value per share is a fairly conservative way to measure a stock s value. What is the book value per share bvps.
If the market value per share is lower than the book value per share then the stock price may be undervalued. 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. 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. In that sense book value and book value per share reflect a minimum value. The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders.
What is book value per share. The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.
It s calculated by dividing the company s stock price per share by its book value per share bvps. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity. Book value per share bvps is a ratio used to compare a firm s common shareholder s equity to the number of shares outstanding.
Book value is based on the amount the company has invested in its assets but not their current market value. Book value per share compares the amount of stockholders equity to the number of shares outstanding. In the case that the firm dissolves it is the amount the shareholders will receive.