Book Value Per Share Of Common Stock Formula
Roe is net income divided by stockholder s equity.
Book value per share of common stock formula. After such modification we get the following widely used formula to calculate book value per share. If company has issued common as well as preferred stock. The book value per share is the minimum cash value of a company and its equity for common shareholders.
Total equity preferred equity and total outstanding 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. 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.
Total outstanding shares total number of shares issued shares as treasury stock. The book value per common share formula below is an accounting measure based on historical transactions. If the value of bvps exceeds the market value per share the.
Calculate book value per share from the following stockholders equity section of a company. The formula for book value per share requires three variables. Book value per share is determined by dividing common shareholders equity by total number of outstanding shares.
1 776 000 100 000 shares 17 76 per share of common stock 2. Book value per share total common stockholders equity preferred stock number of common shares. 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 shareholders equity preferred equity total outstanding common shares book value per share 1 50 000 25 000 5 000 book value per share 1 25 000 5 000. Shareholders equity preferred shares. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.