More specifically, this value is determined by relating the original value of a firms common stock adjusted for any outflow dividends and stock buybacks and inflow retained earnings modifiers to the amount of shares outstanding. For this, subtract the book value of preferred stock from the total stockholders equity. Book value per common share is a measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Analysts who do this on a regular basis are looking to see if. Sometimes called the pricetoequity ratio, the pb ratio compares a stocks book value to its market value. Book value per share formula how to calculate bvps. Therefore, book value per share book value shares outstanding. Book value per share stock holders equity preferred stock total outstanding shares. Book value per share calculator for common stock finance. It is the amount that shareholders would receive if the company dissolves, realizes cash equal to the. Since the valuation is made on the basis of the assets of the company, it. Investors and stock owners use book value per share of common stock to show how much money their shares are worth on the books after all debt is paid off. A financial measure that represents a per share assessment of the minimum value of a companys equity. The price to book pb ratio is used to compare a companys market price to book value and is calculated by dividing price per share by book value per share.
It does not include warrants, preferred shares, retained earnings, or treasury stock. Facebooks book value per share for the quarter that ended in dec. In comparison with the 20022008 findings, the 20012010 period produced a significantly lower pvalue, which indicated a weaker correlation. Book value of equity per share bvps is a ratio that divides common equity value by the number of common stock shares outstanding. Equity value definition, example what is equity value. This formula is also known as book value per common share or book value of equity per share. The presence of preferred stock in the total stockholders equity, however, has a significant impact on the calculation. Telus book value per share analysis book value per share bs is can be calculated by subtracting liabilities from assets, and then dividing it by the total number of currently outstanding shares. The book value of common equity in the numerator reflects the original. Ycharts book value of equity is the equivalent of total assets less total liabilities and preferred equity.
How to calculate book value per share of common stock. In other words, this is the equity value of each preferred stock outstanding. Its important to use the average number of outstanding shares in this calculation. Book value of equity formula, example how to calculate. So higher book value means the shares have more liquidation value. If the market value per share is lower than the book value per share, then the stock price may be undervalued. The pricetobook ratio measures a companys market price in relation to. Equity value vs enterprise value multiples top differences. Market to book ratio price to book formula, examples. This means if the company dissolves, the shareholders will receive an amount per share as per book value per share.
Book value is often used interchangeably with net book value or carrying value, which is the original acquisition cost less accumulated depreciation, depletion or amortization. Although the book value of equity per share is a factor that can be used by the investors to determine the value of stock, it presents only a. Equity value how to calculate the equity value for a firm. Book value of invested capital book value of debt book. What is book value per share and how can it help you in. The book value of equity concept is rarely used as a measurement within a business. Book value is the term which means the value of the firm as per the books of the company. It is derived by multiplying the number of stocks outstanding by the current price per share. Book value per share is just one of the methods for. Mostly, the book value is calculated for common stock only. This amount applies if a company disbands and liquidates its assets and uses the assets pay off liabilities. The formula for book value per share is to subtract preferred stock from stockholders equity, and divide by the average number of shares outstanding. Book value per share is a widely used stock evaluation measure.
Be sure to use the average number of shares, since the periodend amount may incorporate a recent stock buyback or issuance, which will skew the results. Book value per share formula above assumes common stock only. A preferred share is issued at a par value, pays a dividend according to a specified rate based on the par value, and can be redeemed by the issuer at a specified call price. Book value per share is the per share value of a company calculated based on the total equity of all the shareholders. You can find it by dividing the current closing price by the last quarters book value per share. How to compute the book value of equity accountingtools. Computing the book value of preferred stock is slightly different than computing common stocks value because preferred. The market to book ratio, or price to book ratio, is used to compare the current market value or price of a business to its book value of equity on the balance sheet. What is the difference between shareholders equity. You can also use information on the balance sheet to compute the book value per common share. Learn the difference between market capitalization vs book value in this article.
During the past 3 years, the average book value per share growth rate was 6. Book value per share bvps is a measure of value of a companys common share based on book value of the shareholders equity of the company. How can you calculate book value of equity per share bvps. However, bankruptcy nearly always eliminates all equity, so there is no residual book value for investors to be paid. This is how much the company would have left over in assets if it went out of business immediately. The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. It is calculated by the company as shareholders equity book value divided by the number of shares outstanding. Book value per share bvps is the minimum cash value of a company and its equity.
The zacks equity research reports, or zer for short, are our in. Find the latest book value per share for facebook, inc. During the past 5 years, the average book value per share growth rate was 22. It indicates the level of safety associated with each common share after removing the effects of liabilities. The term book value of equity refers to a firms or companys common equity which is the amount available that can be distributed among the shareholders and it is equal to the amount of assets shareholders own outright after all the liabilities have been paid off. B we used the average number of shares outstanding because the closing period amount may skew results if there was a stock issuance or major stock buyouts. Depreciation is the reduction of an items value over time. Book value per share financial ratio the balance small business.
Comparing the market value to the book value can indicate whether or not the stock in overvalued or undervalued. Book value per share formula calculator excel template. The second part is to divide the shareholders equity available to equity stockholders by the number of common shares. Book value per share formula with calculator financial formulas. If there is preferred stock outstanding, in the book value per share calculation above,the numerator will need to be adjusted by the value of the preferred stock outstanding to get the stock holders equity. The book value per share is the amount of the assets that will go to common equity in the event of liquidation.
Book value per share formula in excel with excel template here we will do the same example of the book value per share in excel. The trailing one and threeyear annualized growth rate per share in a companys shareholders equity, or book value. Book value per share bvps overview, formula, example. Is it better to buy a company with a lower book value.
The formula for book value per share book value of equity total number of outstanding shares taking above example of apple inc. A shortterm event, such as a stock buyback, can skew periodending values. The book value of equity per share is a financial measure which indicates a per share estimation of the minimum value of an entitys equity. Growth rate is how much a companys equity is growing over the year. During the past 5 years, the average book value per share growth rate was 10. Book value, or accounting value, is based on a companys historical financial results, looking back. 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 per share bvps is a way to calculate the ratio of a companys stakeholder equity as stated in the balance sheet to the. Book value of equity meaning, formula, calculation. It expresses the minimum value that would be available. This is a financial measure of a per share assessment of the minimum value of a companys equity. Somewhat similar to earnings per share, book value per share relates the stockholders equity to the number of shares outstanding, giving the shares a raw value. For the purpose of analysis, the book value of equity is further divided by a total number of shares to make book value per share.
Book value per share formula, calculator and example. This is equal to the call price plus the dividends in arrears. Book value per share financial definition of book value. The most common use of equity value is to calculate the price earnings ratio price earnings ratio the price earnings ratio pe ratio is the relationship between a companys stock price and earnings per share. Market value is the current stock price times all outstanding shares, net book value is all assets minus all liabilities.
Its most common application is by investors on a per share basis when evaluating the price at which a publiclyheld companys stock sells. Divide the result by the number of common shares outstanding. Market capitalization vs book value investor academy. Book value of equity per share bvps definition book value. Put another way, book value per share rates the total shareholders equity of a stock in relation to the amount of shares outstanding. You use a companys latest balance sheet to come up with the book value of the equity, you look up the number of shares outstanding which is usua. Book value of equity per share bvps financial analysis.
Book value a companys common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets such as goodwill. Capital book value this is the book value of debt plus the book value of common equity, as reported on the balance sheet. Book value per share represents equity of the firm on per share basis. The formulas and examples for calculating book value per share. You can also arrive at price to sales by dividing a stocks price per share by the companys pershare revenue. In other words, the value of all shares divided by the number of shares issued. Thus, this measure is a possible indicator of the value of a companys stock. The bvps is calculated by dividing a companys common equity value by its total number of shares outstanding. Equity per share represents the netasset value backing up each. But the difference with the shareholders equity is illustrated as but the difference with the shareholders equity is illustrated as to find a companys book value, you need to take the shareholders equity and exclude all intangible items. The equity of the company is important, but not nearly as important as the growth rate of the equity. Book value per common share bvps definition investopedia. Book value of an asset refers to the value of an asset when depreciation is accounted for.
Net asset value per share the expression of the value of a company or fund per share. Find the latest book value per share for verizon communications inc. The formula for calculating the book value per share is given as follows. Book value of equity per share bvps measures a companys book value on a pershare basis. Book value per share the ratio of stockholder equity to the average number of common shares. During the past 3 years, the average book value per share growth rate was 20. Since companies are usually expected to grow and generate more profits in the future, market capitalization is higher. How do i find a companys book value and market value and. Online finance calculator which helps to calculate the book value per share from the values of stack holders equity, preferred stock and total outstanding shares. Equity value, also known as market capitalization, is the sumtotal of the values the shareholders have made available for the business and can be calculated by multiplying the market value per share by the total number of shares outstanding.
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