It is calculated by the company as shareholders equity book value divided by the number of shares outstanding. Net income on a per share basis is referred to as eps, or earnings per share. Example l jenapharm was the most respected pharmaceutical manufacturer in east germany. Mathematically, book value is calculated as the difference between a companys total assets and total liabilities. If you want to compare companies, you can convert to book. The formula states that the numerator part is what the firm receives by the issuance of common equity and that figure increases or decreases depending upon the company is making profit or loss and then finally it decreases by issuing dividend and preference stock. It is a good way to value companies which have significant assets. Book value per share equals total assets minus total liabilities divided by total outstanding shares. Find the latest book value per share for berkshire hathaway inc brk.
Warren buffett shares a lot of this investment thoughts in the berkshire hathaway reports and homepage. Book value appeals more to value investors who look at the relationship to the stocks price by using the price to book ratio. A companys book value might be higher or lower than its market value. This calculation is often modified to exclude intangible assets, because they are not readily convertible to cash, in which case the calculation. It is calculated by dividing the current closing price of. Book value formula how to calculate book value of a company. We can apply the values to our variables and calculate the book value per share. Understanding book value and market value is helpful in determining a stocks valuation and how the market views a companys growth. The price to 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. The book value of a share of preferred stock is its call price plus any dividends in arrears. Book value per share bvps is the minimum cash value of a company and. Book value per share is a fairly conservative way to measure a stocks value. The number of dividends paid to stockholders versus the companys total net income. It is equal to the cost of the asset minus accumulated depreciation.
Book value per share financial ratio the balance small business. 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 formula how to calculate bvps. Book value per share is a widely used stock evaluation measure. Book value per common share or, simply book value per share bvps is a method to calculate the pershare book value of a company based on common shareholders equity in the company.
Book value and earnings come from the last annual financial report. You can find these figures on the companys balance. Please click growth rate calculation example gurufocus to see how gurufocus calculates. Intrinsic value calculator based on warren buffetts book. The formula for calculating the book value per share of common stock is. How to figure the book value of bank stock finance zacks. 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. 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. The book value approach to business valuation is not adequate for most small businesses.
The book value per share bvps is calculated by taking the ratio of equity available to. Book value per share compares the amount of stockholders equity to the number of shares outstanding. Book value per share calculator for common stock finance. The book value per preferred share is a financial ratio that calculates amount of equity applicable to each outstanding preferred stock. The presence of preferred stock in the total stockholders equity, however, has a significant impact on the calculation. What is book value per share and how can it help you in.
Net book value is the value at which a company carries an asset on its balance sheet. 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. Book value a companys total assets minus intangible assets and liabilities, such as debt. Book value per share stockholders equity total number of outstanding common stock. Book value per share is also used in the return on equity formula, or roe formula, when calculating on a per share basis. During the past 5 years, the average book value per share growth rate was 22. To arrive at the book value, simply subtract the depreciation to date from the cost. You can find these figures on the companys balance sheet. 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. This compares a stock s book value to its market value. To calculate the book value of a company, subtract the dollar value of the companys preferred stock from its shareholders equity.
Mostly, the book value is calculated for common stock only. You can also determine the book value per share once you know the book value and shares outstanding. 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. Book value per share formula with calculator financial formulas. Pricetobook ratio pb ratio definition investopedia. If you look up any balance sheet you will find that it is divided in 3 sections.
Book value per share bvps overview, formula, example. The book value of a stock book value of total assets total liabilities. Book value is a key measure that investors use to gauge a stocks valuation. 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. The formula for calculating book value per share is the total common stockholders equity less the preferred stock, divided by the number of. To incorporate new information, manually change the earning and book value fields.
Book value per share formula, calculator and example. How to calculate the book value of a company sapling. A shortterm event, such as a stock buyback, can skew periodending values. Using the pricetobook ratio to analyze stocks the motley fool. How to calculate the book value of a preferred stock. In order to properly assess the value of a common shareholders equity we must always remember to subtract the par value of the preferred stock. Generally, the book value per share is of use to investors for determining whether a share is undervalued.
An assets book value is equal to its carrying value on the balance sheet, and companies calculate it netting the asset against its accumulated depreciation. Book value per share tells investors what a banks, or any stocks, book value is on a pershare basis. Book value per common share bvps definition investopedia. Book value of an asset is the value at which the asset is carried on a balance sheet and calculated by taking the cost of an asset minus the accumulated depreciation. Its important to use the average number of outstanding shares in this calculation. 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. This is a percentage of the current price of a share. Ps can also be determined by dividing the price of a stock per share by pershare revenue. Find the latest book value per share for facebook inc fb.
Book value is calculated by taking a companys physical assets including land, buildings, computers, etc. If the market value per share is lower than the book value per share, then the stock. The price to book ratio pb ratio is a ratio used to compare a stock s market value to its book value. Intrinsic value based on warren buffetts book value model intrinsic value. When calculating the book value per share of a company, we base the. The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. The book value of a company is the total value of the companys assets, minus the companys outstanding.
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