Where to get book value per share

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About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. 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.

You are free to use this image on your website, templates etc, Please provide us with an attribution link How to Provide Attribution? The first part is to find out the equity available to the common stockholders. In the below graph, we see the book value of Google for the past 10 years. Investors need to look at both the book value and market value Book Value And Market Value Book value is the net asset value of the company and is calculated as the sum of total assets minus the amount of intangible assets and is always equal to the carrying value of assets on the balance sheet, whereas market value is the value of the assets that we would receive if we sold them today.

If the investors can find out the book value of common stocks, she would be able to figure out whether the market value of the share is worth it. The book value per share BVPS metric can be used by investors to gauge whether a stock price is undervalued by comparing it to the firm's market value per share.

If the firm's BVPS increases, the stock should be perceived as more valuable, and the stock price should increase. In theory, BVPS is the sum that shareholders would receive in the event that the firm was liquidated, all of the tangible assets were sold and all of the liabilities were paid.

However, as the assets would be sold at market prices, and book value uses the historical costs of assets, market value is considered a better floor price than book value for a company. If a company's share price falls below its BVPS, a corporate raider could make a risk-free profit by buying the company and liquidating it. If book value is negative, where a company's liabilities exceed its assets, this is known as a balance sheet insolvency. The formula for BVPS is:.

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. Since preferred stockholders have a higher claim on assets and earnings than common shareholders, preferred stock is subtracted from shareholders' equity to derive the equity available to common shareholders. If XYZ can generate higher profits and use those profits to buy more assets or reduce liabilities, the firm's common equity increases.

Another way to increase BVPS is to repurchase common stock from shareholders. Many companies use earnings to buy back shares. Using the XYZ example, assume that the firm repurchases , shares of stock and that , shares remain outstanding. Besides stock repurchases, a company can also increase BVPS by taking steps to increase the asset balance and reduce liabilities. While BVPS is calculated using historical costs, the market value per share is a forward-looking metric that takes into account a company's future earning power.

For example, a marketing campaign will reduce BVPS by increasing costs. However, if this builds brand value and the company is able to charge premium prices for its products, its stock price might rise far above its BVPS.

However, its value lies in the fact that investors use it to gauge whether a stock price is undervalued by comparing it to the firm's market value per share. A company can use a portion of its earnings to buy assets that would increase common equity along with BVPS. Or, it could use its earnings to reduce liabilities, which would also result in an increase in its common equity and BVPS.

Another way to increase BVPS is to repurchase common stock from shareholders and many companies use earnings to buy back shares. Essentially, the market price per share is the current price of a single share in a publicly traded stock. Unlike BVPS, market price per share is not fixed as it fluctuates based solely on market forces of supply and demand.