Calculate book value per share from the following stockholders equity section of a company. When the purchase price per share is less than book value per share, then the denominator of book value per share decreases by a greater percentage than does the numerator, and book value per share increases. Thus, this measure is a possible indicator of the value of a companys stock. Book value is based on reported amounts within the balance sheet. Net asset value per share the expression of the value of a company or fund per share. Ps ratio an rationale for the ps ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as eps or book value. Keep in mind that the book value per share will not be the same as the market value per share.
What is earnings per share, pe ratio, face value and book. Earnings per share eps is the portion of a companys profit allocated to each outstanding share of common stock. Book value per share of common stock formula, example. In the case that the firm dissolves, it is the amount the shareholders will receive. Book value per common share financial definition of book.
The formula for price to book value is the stock price per share divided by the book value per share. If the market value of a share of common stock is 3. Book value per share is a widely used stock evaluation measure. Find the latest book value per share for amazoncom inc amzn. Book value per share financial definition of book value. In other words, this is the equity value of each common stock. Book value of an asset refers to the value of an asset when depreciation is accounted for. In essence, the book value per share seeks to find out how much are people with common stocks entitled to from the companys equitybased on the number of. This ratio is best suitable for companies that possess a large number of tangible fixed assets. The term book value is a companys assets minus its liabilities and is sometimes referred to as stockholders equity, owners equity, shareholders equity, or. If company has issued common as well as preferred stock. Comparing the stock price to the book value per share is done using the pb ratio, or price to book ratio. Book value per equity share, being a ratio, is calculated by first deducting all the liabilities and obligations that a company might have from all of its assets and dividing the outcome by the total number of outstanding shares. Book value per share financial definition of book value per share.
Find out all the key statistics for ford motor company f, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Book value of equity per share bvps is a ratio that divides common equity value by the number of common stock shares outstanding. General motors cos book value per share for the quarter that ended in dec. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. From the above data, we can compute the earnings per share eps ratio as follows. If the market value per share is lower than the book value per share, then the stock price may be undervalued. Book value per share equity ratio analysis intermediate. After such modification we get the following widely used formula to calculate book value per share. Our job is to find out the book value of utc company. During the past 3 years, the average book value per share growth rate was 17. Pricesales ttm price book mrq enterprise value revenue 3. Jan 30, 2018 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.
Apr 18, 2018 definition and calculation of book value per share. Book value per share of common stock explanation, formula. If book value per share is calculated with just common stock in the denominator, then it. Book value per common share bvps definition investopedia. Book value per share shareholders equity preferred equity total outstanding common shares for a more realworld example of book value per share in action, lets turn to accountingtools. Genm 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. At the same time, we use book value in the case of roe formula when we calculate the roe per share. 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. If the market value of a share of common stock is 2. 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 limited value of the firms situation. Book value per share bvps is a ratio used to compare a firms common shareholders equity to the number of shares outstanding. While its critical to understand the definition and calculation of book value per share. Equity preferred equity total outstanding common shares. Book value per share the ratio of stockholder equity to the average number of common shares.
In these cases, the stock can be priced way above the book value per share of the company. Generally, for value investors, pb ratios carry a great significance, as we like the price of a stock to be well supported by the value on the books. The price to book ratio pb ratio is a ratio used to compare a stocks market value to its book value. During the past 5 years, the average book value per share growth rate was 4. The price to book or pricebook value ratio helps investors to compare the market value, or the price they are normally paying per share, to the traditional measure of the firms value. The ratio of price and book value per share gives us one of the most utilised financial ratio related to stock investing. If the value of bvps exceeds the market value per share. Book value per share, quasireorganization flashcards. Feb 04, 2019 book value per share is a reliable barometer of a stocks potential value. During the past 12 months, general motors cos average book value per share growth rate was 7. It indicates the level of safety associated with each common share after removing the effects of liabilities. Aug 17, 2019 the book value per share is a market value ratio that weighs stockholders equity against shares outstanding.
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. Book value per share formula how to calculate bvps. The formula for book value per share is to subtract preferred stock from stockholders equity, and divide by the average number of shares outstanding. The priceto book, or pb ratio, is calculated by dividing a companys stock price by its book value per share, which is defined as its total assets minus any liabilities. Strictly speaking, the higher the book value, the more the share is worth. The formula for book value per share requires three. The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. Book value is not the same thing as market value or fair value. Book value per share is a reliable barometer of a stocks potential value. Pe ratio is one of the most widely used tools for stock sele. Pricetobook ratio pb ratio definition investopedia.
Book value per share compares the amount of stockholders equity to the number of shares outstanding. Book value per share is usually used to compute the value or price per share of a companys stock during liquidation. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation and not necessarily market valuation. The price to book ratio formula, sometimes referred to as the market to book ratio, is used to compare a companys net assets available to common shareholders relative to the sale price of its stock. Earnings per share serves as an indicator of a companys profitability. Book value per share can separate the wheat from the chaff on a stock but it needs to be applied correctly. Book value per share bvps overview, formula, example. During the past 3 years, the average book value per share growth rate was 0. In other words, the value of all shares divided by the number of shares issued. 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. Book value per share financial ratio the balance small business. The book value per common share is a financial ratio that calculates amount of equity applicable to each outstanding common stock. What is book value per share and how can it help you in.
This refers to the amount of reported stockholders equity for each share of common stock. The book value per share is the minimum cash value of a company and its equity for common shareholders. Using the pricetobook ratio to analyze stocks the motley fool. 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. It is calculated by dividing the current closing price of. 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. Book value per share can separate the wheat from the chaff on a stock.
Should the company decide to dissolve, the book value per common share indicates the dollar value remaining for common shareholders after all assets are. The term book value is a companys assets minus its liabilities and is sometimes referred to as stockholders equity, owners equity, shareholders equity, or simply equity. Depreciation is the reduction of an items value over time. Book value per share formula with calculator financial formulas. Pricesales ttm pricebook mrq enterprise valuerevenue 3. Book value per share is a market value ratio used for accounting purposes by. Is it better to buy a company with a lower book value. So higher book value means the shares have more liquidation value. Book value is generally calculated on per share basis known as book value per share. It is very crucial to understand how preferred shares and common stock are. Another per share amount that analysts frequently calculate is the book value per share. The first part of our calculation would be to find out the total shareholders equity available to common. Apr 15, 2020 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.
When compared to the current market value per share, the book value per share can provide information on how a companys stock is valued. During the past 5 years, the average book value per share growth rate was 14. 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 share after all debts are paid accordingly. Book value per share bvps is financial measure that represents a per share assessment of companys shareholders equity. 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. What is book value per share and how can it help you in investing. Compute the book value per common share for both 20x1 and 20x2 for the crosby corporation. Find the latest book value per share for the home depot inc hd. Book value per common share bvps derives a companys book value on a. 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, calculator and example. It is the amount that shareholders would receive if the company dissolves, realizes cash equal to the book value of its assets and pays liabilities at their book value. It is the amount that shareholders would receive if the company dissolves, realizes cash equal to the. May 22, 2019 if book value per share is calculated with just common stock in the denominator, then it results in a measure of the amount that a common shareholder would receive upon liquidation of the company. Compute the book value per common share for both 2010 and 2011 for the crosby corporation. During the past 12 months, samsung electronics cos average book value per share growth rate was 20. Book value per share bvps takes the ratio of a firms common equity divided by its number of shares outstanding. Samsung electronics cos book value per share for the quarter that ended in dec. If the pe ratio of a companys common stock were 12, and its earnings were 2.