Book value definition and meaning collins english dictionary. Book value per share financial definition of book value. Assets such as property and equipment are considered to be tangible assets. In the case that the firm dissolves, it is the amount the shareholders will receive. What is book value per share and how can it help you in investing. Book value per common share is a measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly.
In other words, the value of all shares divided by the number of shares issued. When compared with the market value, book value can indicate whether a stock is overvalued or undervalued. It means that tech companies, which own very few tangible assets relative to. Book value of an asset refers to the value of an asset when depreciation is accounted for. An accounting term that measures the intrinsic value of a single share of a companys stock.
Tangible book value per share tbvps is the value of a companys tangible assets divided by its current outstanding shares. Should the company dissolve, the book value per common share indicates the dollar value remaining for common shareholders. Book value per share is a widely used stock evaluation measure. The pricetobook ratio compares a companys market value to its book value. Book value per share is a measure utilized by owners of mutual shares in a company to analyze the level of safety related with every individual share after all. Book value definition of book value by merriamwebster. Meaning of book value of equity per share the book value of equity per share is a. What is book value per share definition and meaning. Stocks trading below their book value can give decent.
Also defined as a firms next asset value, book value per share is essentially the total assets of a company, but not counting a firms assets and. Book value per share financial ratio the balance small business. The book value per share bvps is calculated by taking the ratio of equity. Book value per common share or, simply book value per share bvps is a method to calculate the pershare value of a company based on common shareholders equity in the company.
A simple calculation dividing the companys current stock price by its stated book value per share gives you the pb ratio. In business, the book value of an asset is the value it is given in the account books of. Lesson summary the intrinsic value of a stock is a price for the stock. Book value per share bvps overview, formula, example. In simple words, book value per equity share gives a snap shot of a firms. The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. Book value per common share bvps derives a companys book value. Often, book value is expressed on a pershare basis, dividing the total shareholder equity by the number of shares of stock outstanding. Dividing this by the number of shares will give the book value per share.
The market value of a company is its share price multiplied by the number of outstanding shares. What this means is that shares are being purchased and sold due to the perceptions of investors. The book value of a company divided by the number of shares outstanding. Book value per share formula with calculator financial formulas. Book value per common share bvps definition investopedia. Book value definition is the value of something as shown on bookkeeping records as distinguished from market value how to use book value in a sentence. Book value per share is a reliable barometer of a stocks potential value. Book value per share bvps takes the ratio of a firms common. Book value per share can separate the wheat from the chaff on a stock but it needs to be applied correctly. Book value per share is simply common stockholders equity number of shares of common stock if there are no preferred shares outstanding, total stockholders equity can be used in place of common stockholders equity.
Depreciation is the reduction of an items value over time. What is book value per share and how can it help you in. It is the price at which a share is currently trading on the market. Find the latest book value per share for amazoncom inc amzn.
In other words, if a company liquidated all of its assets and paid off all its debt. Share pricebook value per share pricetobook ratio admittedly, this is a much more complicated process than the ratios mentioned above and is not too useful for assetlite business models. Conceptually, book value per share is similar to net worth, meaning it is assets minus debt, and may be looked at as though what would occur if operations were to. Tbvps determines the potential value per share of a company in the event that it must liquidate its assets. A tangible book value per share tbvps is a method of valuing a company on a pershare basis by measuring its equity after removing any. Priceearnings ratio definition of priceearnings ratio. Book value per share bvps is a ratio used to compare a firms common shareholders equity to the number of shares outstanding.
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