The Book Value Formula

Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes.

The book value formula. Here s the formula of price to book value price to book value ratio market price per share book value per share. This can be summarized into the following formula. How book value of assets works.

Alternatively book value can be calculated as the sum total of the overall shareholder equity of the company. This helps create consistency in reporting standards. Instead the average book value shall be found by adding the net.

The price to book value ratio p b formula is also referred to as a market to book ratio and measures the proportion between the market price for a share and the book value per share. 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. In accordance with the cost principle of accounting assets are always listed in the general ledger at cost.

The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply 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.

The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders. The book value of an asset is its original purchase cost minus any accumulated depreciation. Book value may also be.

The calculation of book value for an asset is the original cost of the asset minus the accumulated depreciation where accumulated depreciation is the average annual depreciation multiplied by the age of the asset in years. In case where subsequent investments are to be made after the initial investment the above formula would not account for the additional investment. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes.