How to Find the Book Value Per Share

Book value per share (BVPS) is a fundamental financial metric offering insight into a company’s financial health from an accounting perspective. It represents the portion of a company’s equity attributable to each outstanding common share. BVPS helps in understanding a company’s underlying value as recorded on its financial statements.

Understanding Book Value Per Share

Book value per share signifies the theoretical amount common shareholders would receive for each share if a company were to liquidate all its assets, pay off all its liabilities, and distribute the remaining funds. It is derived directly from the company’s accounting records, reflecting the historical cost of assets and liabilities. This metric specifically relates to the common equity recorded on the balance sheet.

While it offers a baseline value, it differs conceptually from market value per share, which is determined by supply and demand in the stock market and reflects future earnings potential.

Identifying Key Financial Data

To calculate book value per share, two primary components are required: Total Shareholder Equity and the Number of Shares Outstanding. Total Shareholder Equity represents the residual amount of assets available to shareholders after all liabilities have been paid. This figure is typically found in the “Shareholders’ Equity” section of a company’s Balance Sheet.

The Shareholder Equity section often includes common stock, retained earnings, and additional paid-in capital. When preferred shares are present, their value is usually excluded from total shareholder equity for BVPS calculation, as preferred stockholders have a higher claim on assets during liquidation.

The Number of Shares Outstanding refers to the total stock currently held by all shareholders, including institutional investors and company insiders. This number is generally located in the “Capital Stock” section of a company’s Balance Sheet or in the footnotes of its financial filings, such as annual reports (10-K) and quarterly reports (10-Q) with the U.S. Securities and Exchange Commission. Use the most recent figures available for both components.

Step-by-Step Calculation

The formula is: Book Value Per Share = Total Shareholder Equity / Number of Shares Outstanding. This formula divides the common equity available to shareholders by the total count of their shares.

For example, consider a hypothetical company with a Total Shareholder Equity of $50,000,000. If this company has 10,000,000 common shares outstanding, the calculation would proceed as follows. Divide the $50,000,000 in Total Shareholder Equity by the 10,000,000 Number of Shares Outstanding. This yields a book value per share of $5.00.

The process involves simply plugging the retrieved shareholder equity and shares outstanding figures into the division. The resulting value represents the accounting worth per share.

Interpreting the Result

The calculated book value per share provides a specific accounting-based measure of a company’s value. It reflects the underlying net asset value attributable to each common share, based on the historical costs recorded in its financial statements. This means it indicates what shareholders would theoretically own per share if the company’s assets were sold and liabilities were settled according to their book values.

Book value per share is considered a baseline or floor value for a company’s shares from an accounting perspective. It is a historical measure, meaning it is based on past transactions and does not account for potential future earnings or growth. The number signifies the equity remaining for common shareholders after all financial obligations are accounted for, offering a snapshot of the company’s financial structure.