How to Use This Calculator
- Enter the Total Shareholders' Equity of the company (this is typically found on the company's balance sheet).
- Enter the Preferred Stock Value if applicable (this is the value of the company's preferred stock, also found on the balance sheet).
- Enter the Number of Common Shares Outstanding (this is the total number of common shares currently held by investors).
- Click the Calculate button to compute the Book Value Per Share.
What is Book Value Per Share (BVPS)?
Book Value Per Share (BVPS) is a financial metric that indicates the minimum value of a company's equity available to common shareholders. It is calculated by subtracting the total preferred equity from the company's total shareholders' equity, then dividing by the number of outstanding common shares.
How to Use BVPS
BVPS can be used for several purposes:
- Valuation Analysis: Investors compare BVPS to the market price per share to determine if a stock is undervalued or overvalued.
- Financial Health Assessment: A higher BVPS may indicate a financially healthier company with more equity cushion.
- Dividend Potential: Companies with strong BVPS are often considered more likely to pay dividends.
Limitations of BVPS
While useful, BVPS has limitations:
- It is based on historical cost and may not reflect current market value.
- It doesn't account for intangible assets like brand value or intellectual property.
- It doesn't consider future growth potential or market conditions.