What Is Book Value Per Share With Example

Some stockholders have keen interest in knowing the book value of the shares they own.

What is book value per share with example. Using the previous example assume that the company repurchases 500 000 common stocks from its shareholders. Book value per share is a fairly conservative way to measure a stock s value. The information needed to calculate bvps is found on a company s balance sheet.

This article is focused on its calculation. The revised bvps will be as follows. Book value per share of common stock is the amount of net assets that each share of common stock represents.

Book value per share is usually used to compute the value or price per share of a company s stock during liquidation. 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. Comparing bvps to a stock s market price could help value investors find opportunities.

It will reduce the current shares outstanding to 2 5 million 3 000 000 500 000. This makes sense because equity represents the net assets of a business. In the case that the firm dissolves it is the amount the shareholders will receive.

Book value per share bvps is a ratio used to compare a firm s common shareholder s equity to the number of shares outstanding. The book value of a company stripped to basics is the value of the company the stockholders will own if the firm s. One of the main ways of increasing the book value per share is to buy back common stocks from shareholders.

Example of how to use book value of equity per share assume for example that xyz manufacturing s common equity balance is 10 million and that 1 million shares of common stock are outstanding. Book value per share book value per share bvps is a measure of value of a company s common share based on book value of the shareholders equity of the company. 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.