The yield to maturity on the bonds is 5%, and the firms tax rate is 21%. Book value per share is a widely used stock evaluation measure. However, in practice, depending on the source of the. In depth view into total book value per share including historical data from 1991, charts, stats and industry comps. Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by the number of common shares. Stock market investors often find themselves trying to resolve the difference between a stocks value and its price. One stockholder owned 750 shares on february 5 before the dividend. This total is then parsed out among each individual share for common. It is calculated by the company as shareholders equity book value divided by the number of shares outstanding. The term book value is a companys assets minus its liabilities and is sometimes referred to as stockholders equity, owners equity, shareholders equity, or. Aug 17, 2019 the book value per share is a market value ratio that weighs stockholders equity against shares outstanding. The yield to maturity on the bonds is 9%, and the firms tax rate is 40%. 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.
The book value of a company is the difference between that companys total assets and total liabilities, and not its share price in the market. A popular ratio that is used to compare market and book values is the price to book pb ratio, which is calculated as the price per share divided by the book value per share. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. During the past 3 years, the average book value per share growth rate was 2. Calculate the total book value of a corporations preferred stock by multiplying the book value of each share by the total number of shares outstanding. Compute the book value per share and total book value of this stockholders shares immediately before and after the stock dividend of february 5.
Book value of equity per share bvps is a ratio that divides common equity value by the number of common stock shares outstanding. Book value per equity share is, therefore, a ratio calculated by deducting all the liabilities and obligations form all assets and thereafter dividing it by the total number of outstanding shares. Book value per share is simply common stockholders equity number of shares of common stock. Book value of equity meaning, formula, calculation. Book value of an asset refers to the value of an asset when depreciation is accounted for. Dec 10, 2012 over here i explain what book value is and how to find it. During the past years, the highest 3year average book value per share growth rate of boeing co was 74. Generally, the market price of shares, grow at a similar rate as its book value per share. 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. The real estate collapse of 2008 demonstrated this principle. Indicated annual dividend % ltdcapital % distribution to net profits % return on shareholders equity.
I have already explained few terms in my previous answers. If there are no preferred shares outstanding, total stockholders equity can be used in place of common stockholders equity. A companys book value is the amount of money shareholders would receive if assets were liquidated and liabilities paid off. 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. Book value per share in excel with excel template let us now do the same book value per share calculation above in excel. Divide it by the number of outstanding common shares to get the equity value per common share. One reason is that a corporations stockholders equity is simply the difference between the total amount of assets reported on the balance sheet and the total amount of liabilities reported. Book value per share formula how to calculate bvps. The presence of preferred stock in the total stockholders equity, however, has a significant impact on the calculation. Here we are talking about book value per share and not book value hence tracking book value per share growth like eps growth, is a very reliable indicator for predicting future performance of a stocks price. Mar 28, 2017 book value per share equals total assets minus total liabilities divided by total outstanding shares. Mostly, the book value is calculated for common stock only. First subtract the preferred equity from the total shareholders equity.
Depreciation is the reduction of an items value over time. How to calculate the book value of a preferred stock. In depth view into tot book value per share explanation, calculation, historical data and. Book value per share bvps overview, formula, example. Book value per share of common stock explanation, formula. Bps book value per share for the quarter that ended in mar. 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. May 22, 2019 book value per share compares the amount of stockholders equity to the number of shares outstanding.
If you have spent any time investing in the stock market, you know that value and price are two different measures arrived at by different means. Book value per common share bvps definition investopedia. You can easily calculate the book value in the template provided. The book value of a company is the total value of the companys. The formulas and examples for calculating book value per share with and without preferred stock are given below. 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.
It has no specific relation to the value of the companys assets, such as book value per share does, which is based on the information from a companys balance sheet. Book value per share can be used to generate a measure of comprehensive earnings, when the opening and closing values are reconciled. When compared to the current market value per share, the book value per share can provide information on how a companys stock is valued. 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 usually mentioned in the earnings per share. Amzn, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. This means if the company dissolves, the shareholders will receive an amount per share as per book value per share. The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. 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. Book value is a key measure that investors use to gauge a stocks valuation. The bvps only includes the book value of assets total assets less intangible. Book value is a useful tool for evaluating the market value per share. You can apply the same method to get the book value growth rate using book value per share data.
If the market value per share is lower than the book value per share, then the stock price may be undervalued. In other words, the value of all shares divided by the number of shares issued. Book value per share definition the book value per share is the value each share would be worth if the company were to be liquidated, all the bills paid, and the assets distributed. The book value per share formula is used to calculate the per share value of a. Book value per share represents equity of the firm on per share basis. In this case, define book value per share as total stockholders equity divided by the number of issued and distributable shares. Priceearnings ratio is a good tool for comparing the value of competing companies. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Apple price to book ratio 20062020 aapl macrotrends. If the value of bvps exceeds the market value per share. Here you need to provide the four inputs of total assets, total liabilities, preferred stock and number of common shares. Book publishing revenues in the higher education market alone amounted to nearly 4 billion u. Calculating earnings per share gives investors an estimate of what the company should be worth. 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.
Find out all the key statistics for citigroup, inc. Book value per share compares the amount of stockholders equity to the number of shares outstanding. Knowing the book value per share of the company youre analyzing is very important as it can show you whether or not the shares are. The formula for book value per share book value of equity total number of outstanding shares.
Find the latest book value per share for tesla inc tsla. The book value per share bvps is calculated by taking the ratio of equity. A company can also increase the book value per share by using the generated profits to buy more assets or reduce liabilities. The pricetobook, 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. Book value per share formula with calculator financial formulas. Book value formula how to calculate book value of a company. Book value per share equals total assets minus total liabilities divided by total outstanding shares.
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. Total s book value per share for the quarter that ended in dec. During the past 5 years, the average book value per share growth rate was 4. Book value per share, quasireorganization flashcards. Compute the total market value of the investors shares in part 2 as of february 5 and february 28. The market value is the value of a company according to the markets. During the past 3 years, the average book value per share growth rate was 1. Using the pricetobook ratio to analyze stocks the motley fool. He is asked to calculate the book value per share of a stock and check if the stock trades at a fair value. Book value per share bvps is the minimum cash value of a company.
Part 1 earnings per share eps eps stands for earnings per share. The market price per share of stockusually termed simply share price is the dollar amount that investors are willing to pay for one share of a companys stock. Price to book value is a valuation ratio that is measured by stock price book value per share. In the absense of preferred shares, the total stockholders equity is used. Book value indicates the difference between the total assets and the total liabilities and when the formula for book value per share is to divide this book value by. Traditionally, a companys book value is its total assets minus intangible assets and liabilities. Book value of equity per share effectively indicates a firms net asset value total assets total liabilities on a pershare basis. It is the amount that shareholders would receive if the company dissolves, realizes cash equal to the. Book value per share financial ratio the balance small business.
The idea embedded in the concept of book value per share is that a book value higher than the current stock price indicates the undervaluation of a. One stockholder owned 800 shares on february 5 before the dividend. The current price to book ratio for apple as of may 12, 2020 is 17. During the past 5 years, the average book value per share growth rate was 0.
In other words, the value of all shares divided by. I am borrowing extracts from my previous posts to make this answer complete. Keep in mind that the book value per share will not be the same as the market value per share. 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. The book value is essentially the tangible accounting value of a firm compared to the market value that is shown. In accounting, book value is the value of an asset according to its balance sheet account balance. Thus, this measure is a possible indicator of the value of a companys stock. C, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Find the latest book value per share for the boeing company ba.
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