Book Value Per Share Vs Stock Price

For example a company has a p b of.

Book value per share vs stock price. Specifically it compares the company s stock price to its book value per. It is equal to the price per share divided by the book value per share. Finally we divide the current share price of 15 by that 10 to reach a price to book.

If the value of bvps exceeds the market value per share the. Book value is the value of the company according to its balance sheet. The book value per share is a little more complicated.

In other words a stock s actual value is whatever someone is willing to pay. Book value per share is a fairly conservative way to measure a stock s value. If there are 10 million shares outstanding each share would represent 2 50 of book value.

The price to book p b ratio is a popular way to compare market value and book value. The price to book ratio formula is calculated by dividing the market price per share by book value per share. The stock market assigns to.

The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. The basics of the p b ratio the p b ratio compares a company s market capitalization or market value to its book value. If the share price is 5 then the p b ratio would be 2x 5 2 50.

The key differences. A stock s trading price represents the number that an arm s length willing seller and willing buyer find agreeable to each party. Though the market value can be calculated at any point in time an investor gets to know the book value when a company files it s earning on a quarterly basis.