Book Value per Share | Arshnoor Singh

Book Value per Share What is Book Value per Share? Why is Book Value per Share important in stocks market?

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Book value per share (BVPS) is the ratio of equity available to common shareholders divided by the number of outstanding shares. This figure represents the minimum value of a company's equity and measures the book value of a firm on a per-share basis.

The book value per share (BVPS) metric can be used by investors to check whether a stock price is undervalued by comparing it to the firm's market value per share. If a company’s BVPS is higher than its market value per share its current stock price then the stock is considered undervalued.

If the firm's BVPS increases, the stock should be perceived as more valuable, and the stock price should increase. Formula for Book Value per Share BVPS = Total Equity − Preferred Equity / Total Shares Outstanding

Shareholders’ equity is the owners’ residual claim in the company after debts have been paid. It is equal to a firm's total assets minus its total liabilities which is the net asset value or book value of the company as a whole.