Book Value per Share
Book Value per Share expresses the total net assets of a
business on a per share basis. This allows us to compare the book values of a
business to the stock price and gauge differences in valuations. Net Assets
available to shareholders can be calculated as Total Equity less Preferred
Equity. Book Value per Share is calculated as follows:
Net Assets Available to Common Shareholders * / Outstanding Common Shares
* Calculated as Total Equity less Preferred Equity.
EXAMPLE - Total
Equity is $ 5,000,000 including $ 400,000 of preferred equity. The total number
of common shares outstanding is 80,000 shares. Book Value per Share is ($
5,000,000 - $ 400,000) / 80,000 or $ 57.50
