Book Value Per Share With Example
The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s.
Book value per share with example. Total outstanding shares total number of shares issued shares as treasury stock. Mostly the book value is calculated for common stock only. Book value per share is a fairly conservative way to measure a stock s value.
Book value per share. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. The presence of preferred stock in the total stockholders equity however has a significant impact on the calculation.
One of the main ways of increasing the book value per share is to buy back common stocks from shareholders. In this video on book value per share of common stock we look at the book value per share formula and calculate bvps along with practical examples. 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 is determined by dividing common shareholders equity by total number of outstanding shares. The formulas and examples for calculating book value per share with and without preferred stock are given below. Use of book value per share the book value per share may be used by some investors to determine the equity in a company relative to the market value of the company which is the price of its stock.
Book value per share example. It will reduce the current shares outstanding to 2 5 million 3 000 000 500 000. Using the previous example assume that the company repurchases 500 000 common stocks from its shareholders.
As a common shareholder she wants to know the minimum equity that she would have a claim on. Shareholders equity preferred shares. Ashley looks at their stock chart and finds their equity is 9 6 million.