How Do You Calculate Book Value Per Share
How do you calculate book value per share.
How do you calculate book value per share. Net income on a per share basis is referred to as eps or earnings per share. Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by the 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.
Roe is net income divided by stockholder s equity. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes. Also since you re working with common shares you must subtract the preferred shareholder equity from the total equity.
The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes. 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.
Otherwise the book value per share would be inflated and inaccurate. To calculate the book value per share you must first calculate the book value then divide by the number of common shares. If the value of bvps exceeds the market value per share the.