Book Value Ratio Formula Example

In this case the book value per share for this soda company would be 0 11.

Book value ratio formula example. Example of how to use the p b ratio assume that a company has 100 million in assets on the balance sheet and 75 million in liabilities. Book value per share will be bvps 495 61 book value calculator. You can use this book value calculator.

The book value of that company would be calculated simply. Market capitalization net book value. The market to book formula is.

Using the p b ratio formula we get p b ratio formula market price per share book value per share. Where net book value total assets total liabilities. Price to tangible book value share price tangible book value per share for example let s assume that company xyz has 10 000 000 shares outstanding which are trading at 3 per share.

The market to book value ratio can simply be calculated by using the following formula. For example apple had this ratio ranging around 9 as of october 2018 and amazon ranged around 20. Bvps dfrac 9 600 000 3 090 000 61 500 000 0 11.

Drawbacks of book value per share. The market to book ratio is calculated by dividing the current closing price of the stock by the most current quarter s book value per share. With an understanding of what the bvps means ashley can compare this result with how the company is trading on the market.

The company also recorded 15 000 000 of tangible book value last year. Price to book value ratio of citigroup. One of the limitations of book value per share as a valuation method is that it is based on the book value and it excludes other material factors that can affect the price of a company s share.