Book Value

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Book Value is a company's assets minus its liabilities and sometimes referred to as stockholder's fund, owner's equity or simply equity.

The book Value of equity per share is one factor that investors can use to determine whether a stock price is undervalued or overpriced. If a company can increase its book value of equity per share by growing it profitability to boost retained earnings. (BVPS),investors usually view the stock as more valuable and the stock price increases.

Book Value per share is the amount of money a holder of a common share would get should a company were to liquidate.

BVPS can be calculated as thus:
BVPS = shareholders funds/ number of shares outstanding
OR
BVPS= total shareholder equity- preferred equity/total outstanding shares.

Investdata Academy

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