Handeware
Investing

Book value per share

$5.00
Common equity
$1,500,000,000

This is arithmetic for general information, not financial advice.

Book Value Per Share Calculator

Book value per share is what a company's net assets come to for each share, using the figures on its balance sheet. It gives a recorded net worth to set beside the share price.

How it works

Start with total assets, subtract total liabilities, then subtract preferred stock, which is paid out before common shareholders. That leaves common equity. Divide common equity by the shares outstanding.

Balance sheet values are recorded costs adjusted over time, not current market prices, so the figure can differ a lot from what the assets would sell for.

Worked example

With $4,000,000,000.00 of total assets, $2,500,000,000.00 of liabilities and $0.00 of preferred stock, common equity comes to $1,500,000,000. Spread over 300,000,000 shares, that is $5.00 per share.

Questions

Why compare book value with the share price?

A price well above book value means the market is counting on value the balance sheet does not show, such as brand strength or growth. Treat the gap as a question to ask, not an answer.

Do intangible assets count?

It depends on how the company reports them. Some intangibles, such as goodwill acquired in a purchase, are included in total assets, which can raise book value.

Where do I find these numbers?

They are on the balance sheet in a company's annual report. The shares outstanding are on the cover page or in the income statement.

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