Book Value per Share equals total book value divided by shares outstanding
Book Value per Share (alternately "Net Asset Value per Share" or "Equity Per Share" is a recalculation of book value, wherein the total book value is divided by the number of shares outstanding. This number is particularly useful in quickly calculating the price to book ratio.
Investors use book value per share as a measure of a company's net value of all its "stuff", scaled by the number of shares outstanding. This is useful when looking at the underlying asset values of two differently sized companies. As, while a company with 1,000,000 shares outstanding and a company with 100,000,000 shares outstanding may have drastically different book values, they may have similar book values per share.
Example
- Company XYZ reports total assets of $17 million and total liabilities of $7 million for a total book value of $10 million. The company has 2,000,000 shares outstanding. Thus, the book value per share is $5.00 (10 million / 2 million = 5.00).
See Also
