How To Compute Book Value Of Equity

The formula for book value per share book value of equity total number of outstanding shares.

How to compute book value of equity. For example in apple s 1q report released february 1 2018 the company reported total assets of 406 794 billion and liabilities of 266 595 billion. Book value total common shareholders equity preferred stock number of outstanding common shares. Calculate book value of equity by subtracting a firm s total liabilities from its total assets to arrive at stockholders equity.

Therefore the company s common equity is 8 900 000 as on the balance sheet date. How to calculate book value. Based on the above formula calculation of book value of equity of rsz ltd can be done as 5 000 000 200 000 3 000 000 700 000.

Simply subtract liabilities from assets to arrive at book value. You can find these figures on the balance sheet. This means if the company dissolves the shareholders will receive an amount per share as per book value per share.

Book value per share represents equity of the firm on per share basis. The best and most common way to find out the book value of the company is to deduct the total liabilities from the total assets. The formula states that the numerator part is what the firm receives by the issuance of common equity and that figure increases or decreases depending upon the company is making profit or loss and then finally it decreases by issuing dividend and preference stock.

Alternatively the investors can also look at shareholders equity to find out the book value directly.