What is the Book Value of a Share?

The Book value of a share is the equity general to shareholders divided by the total number of outstanding shares. It refers to the book value of an asset that is reached after subtracting the earned depreciation from its actual value. Let’s explore what is the book value of a share.

How to Calculate the Book Value of a Share?

Here is how to calculate the BVPS:

The formula of BVPS is:

Book Value Per Share = Shareholder Equity – Preferred Equity / Number of outstanding common shares

Where,

Shareholders’ Equity = Total assets - Total liabilities

Preferred Equity = it is subtracted because preferred stockholders have a higher share than common shareholders.

Example of BVPS

For Example, suppose that a company has,

	Value
Total Assets	20,00,000
Total Liabilities	8,00,000
No preferred Stock	N/A
Outstanding shares	20,000

1st, calculate the shareholders’ equity: 20,00,000 – 8,00,000 = 12,00,000

BVPS = 12,00,000 / 20,000

= INR 60

So if the company had INR 2,00,000 in preferred stock, the calculation would be:

BVPS = 12,00,000 – 2,00,000 / 20,000

= 10,00,000/ 20,000

= INR 50

Conclusion

In conclusion, the BVPS is the foundation metric in stock analysis, although not the only indicator, so it offers a conservative and insightful view of a company’s real worth, especially useful when combined with other metrics like P/E ratio and the market value. So we hope this blog has been helpful to you.

About the Author

Saniya

I am a writer, and this sentence speaks louder than anything, I love to play with words because I have a passion for writing easy and good-quality content that reflects simplicity. Readers like content that is straightforward with simple language. My priority has always been to deliver content that connects with the reader.

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