Book value per share

Definition

Book value per share (BVPS) is calculated by dividing a company's total shareholders' equity by the number of outstanding shares. It represents the per-share value of a company's equity based on its balance sheet.

5 Must Know Facts For Your Next Test

1. BVPS can indicate whether a stock is undervalued or overvalued compared to its market price.
2. An increasing BVPS over time generally suggests that the company is growing its net assets.
3. BVPS is useful for comparing companies within the same industry.
4. The formula for BVPS is (Total Equity - Preferred Equity) / Total Outstanding Shares.
5. BVPS does not account for intangible assets and may not reflect the actual market value.

Review Questions

• How do you calculate book value per share?
• Why might an investor consider BVPS when evaluating a stock?
• What can cause discrepancies between BVPS and market value per share?

Related terms

Market Value Per Share: The current trading price of a company's stock in the open market

Shareholders' Equity: The residual interest in the assets of a company after liabilities are deducted

Price-to-Book Ratio (P/B Ratio): A financial ratio used to compare a company's current market price to its book value