Book Value Per Share Ratio

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 ratio. The book value per share is a little more complicated. Unlike the pb ratio the mb formula compares values on a company wide basis. Clorox book value per share analysis book value per share b s is can be calculated by subtracting liabilities from assets and then dividing it by the total number of currently outstanding shares.

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. Be sure to use the average number of shares since the period end amount may incorporate a recent stock buyback or issuance which will skew the results. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding.

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. The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. It indicates the level of safety associated with each common share after removing the effects of liabilities.

Learn more about how to calculate this ratio what it tells you and how investors use it to guide their decisions. If the value of bvps exceeds the market value per share the. We first subtract the total liabilities from the total assets and divide the difference by the total number of shares outstanding on that date.

In this equation book value per share is calculated as follows. Book value per share is a fairly conservative way to measure a stock s value. Formula and calculation of p b ratio.

The book value per share bvps is a ratio that weighs stockholders total equity against the number of shares outstanding. It indicates the level of safety associated with each common share after removing the effects of liabilities. Many investors rephrase this equation to form the book to market ratio formula by dividing the total book value of the firm by the total market value of the company.