You can apply the same method to get the book value growth rate using book value per share data. In case the company does encounter such an event, all assets are liquidated in. Book value per share is the gaap number number of shares outstanding. So higher book value means the shares have more liquidation value. Net asset value per share synonyms, net asset value per share pronunciation, net asset value per share translation, english dictionary definition of net asset value per share. 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 intangible assets. Its calculated by dividing the companys stock price per share by its book value. In the case that the firm dissolves, it is the amount the shareholders will receive. The pricetobook ratio measures a companys market price in relation to. The balance sheet equity value is divided by the number. Therefore, equity is simply assets liabilities of a company and is comparable to the concept of net worth. Book value per share equals total assets minus total liabilities divided by total outstanding shares. The book value per share is the amount of the assets that will go to common equity in the event of liquidation. Book value per share book value per share is the par value stated on a common stock plus the retained earnings.
Meaning, pronunciation, translations and examples log in dictionary. Book value of equity per share effectively indicates a firms net asset value total assets total liabilities on a pershare basis. It can be used in regard to a specific asset, or it can be used in regard to a whole company. Often, book value is expressed on a pershare basis, dividing the total shareholder equity by the number of shares of stock outstanding. The simplest explanation i can give is that it tells potential investors how much their shares would be worth in the event the company in question goes out of business. The net book value can be defined in simple words as the net value of an asset. Net tangible book value how is net tangible book value. Net book value is one of the most popular financial measures, particularly when it comes to valuing companies. The actual worth asset refers companys asset companys liabilities. Pricetobook ratio pb ratio definition investopedia. Net asset value legal definition of net asset value. The value of a companys net assets at amounts reported on its balance sheet.
Comparing the market value to the book value can indicate whether. The book value of a company divided by the number of shares outstanding. This calculation is often modified to exclude intangible assets, because they are not readily convertible to cash, in which case the calculation is called the. The price to book ratio formula, sometimes referred to as the market to book ratio, is used to compare a companys net assets available to common shareholders relative to the sale price of its stock. Book value per share of common stock is the amount of net assets that each share of common stock represents. How can a stock have a negative book value per share. Value definition in the cambridge english dictionary.
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. Tour dhorizon des mots cles a connaitre imperativement avant dinvestir en bourse. The formula for price to book value is the stock price per share divided by the book value per share. Some stockholders have keen interest in knowing the book value of the shares they own. Book value is often used interchangeably with net book value or carrying value, which is the original acquisition cost less accumulated depreciation, depletion or amortization. An accounting term that measures the intrinsic value of a single share of a companys stock. View book value per share for tot access over 100 stock metrics like beta, evebitda, pe10, free cash flow yield, kz index and cash conversion cycle. The trailing one and threeyear annualized growth rate per share in a companys shareholders equity, or book value. Put another way, the book value is the shareholders equity, or how much the company would be worth if it paid of all of its debts and liquidated immediately. Theoretically, the company can sell all its assets and pay off all its debt and. Net asset value per share definition of net asset value. Book value per share financial definition of book value. One way to look at book value per share is to consider what will happen if the company ceases all operations today.
Net book value meaning in the cambridge english dictionary. It is calculated by the company as shareholders equity book value divided. How do i interpret pricebook and book value per share on. The formula for book value per share is to subtract preferred stock from stockholders equity, and divide by the average number of shares outstanding. Tangible book value per share is the pershare value of a companys equity after removing any intangible assets. Thus, this measure is a possible indicator of the value of a companys stock. Book value definition and meaning collins english dictionary.
When a company has losses and the total of those losses exceed the total profits in profitable periods and this total loss is greater than the paid in capital meaning that they have borrowed money and lost that, too then the book value is negative. In accounting a company, the net book value is the value of the companys assets minus the value of its liabilities and intangible assets. Book value per share bvps is a ratio used to compare a firms common shareholders equity to the number of shares outstanding. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation and not necessarily market valuation. So youd think id be a big believer in the importance of book value. Somewhat similar to earnings per share, book value per share relates the stockholders equity to the number of shares outstanding, giving the shares a raw value. In business, the book value of an asset is the value it is given in the account books of. Is it better to buy a company with a lower book value. Starbuckss book value per share for the quarter that ended in dec. Il sert aussi a determiner le price to earnings ratio per.
Definition of value from the cambridge academic content dictionary. The book value per share and the market value per share are some of the tools used to evaluate the value of a companys stocks. Should the company dissolve, the book value per common share indicates the dollar value remaining for common shareholders. Book value per share financial dictionary the free dictionary. On appelle earnings per share eps, en francais benefice net par action bnpa, le benefice net.
For instance, value investors search for companies trading for prices at or below book value indicating a pricetobook ratio of less than 1. In accounting, book value is the value of an asset according to its balance sheet account. Net book value financial definition of net book value. Literally, book value per share meaning the value of the business according to its financial statement. Book value per share is also used in the return on equity formula, or roe formula, when calculating on a per share basis. If you want to compare companies, you can convert to book value per share, which is simply the book value divided by. Depreciation is the reduction of an items value over time. In the united kingdom, the term net asset value may refer to the book value of a. Book value is the net asset value of the company according to standard accounting practice gaap, audited. Stocks trading below their book value can give decent. Several good stocks are trading below their book value. The ratio of stockholder equity to the average number of common shares.
Book value is also the net asset value of a company calculated as total assets. If book value per share is calculated with just common stock in the denominator, then it results in a measure of the amount that a common shareholder would receive upon liquidation of the company. Definition of book value per share in the financial dictionary by free online english dictionary and encyclopedia. If the market value per share is lower than the book value per share, then the stock price may be undervalued. Net tangible book value how is net tangible book value abbreviated. Bvps book value per share valeur comptable par action ratio.
Decide whether you want book value per share or tangible book value per share. The price to book pb ratio is used to compare a companys market price to book value and is calculated by dividing price per share by book value per share. Since book value represents the intrinsic net worth of a company, it is a helpful tool for investors wanting to determine if a company is underpriced or overpriced, which could indicate a potential time to buy or sell. Book value definition of book value by the free dictionary. Book value per share bvps overview, formula, example. Net income on a per share basis is referred to as eps, or earnings per share. Net asset value per share the expression of the value of a company or fund per share. Valeur comptable par action book value per share ou bvps. Book value is calculated by totaling the companys assets, subtracting all debts, liabilities, and the liquidation price of preferred stock, then dividing the result by the number of outstanding shares of common stock. Analyse boursiere 68, analyse fondamentale investirles echos. Book value is the term which means the value of the firm as per the books of the company. Book value per share the ratio of stockholder equity to the average number of common shares. En francais bvps book value per share signifie valeur comptable par action. This may also be the same as the book value or the equity value of a business.
Book value per share is a widely used stock evaluation measure. The monetary amount by which an asset is valued on a companys balance sheet, a figure not necessarily identical to the amount the asset could bring on the open market. It is important to note that net book value almost never equals market value. Book value is a companys net asset value, which is calculated by total assets minus intangible assets and liabilities. The book value per share calculator is used to calculate the book value per share. If a corporation does not have preferred stock outstanding, the book value per share of stock is a corporations total amount of stockholders equity divided by the number of common shares of stock outstanding on that date for example, if a corporation without preferred stock has stockholders equity on december 31 of. In other words, the value of all shares divided by the number of shares issued. Net book value signification, definition dans le dictionnaire. Book value per share meaning is a very vital concept here. The book value per share is a market value ratio that weighs stockholders equity against shares outstanding. What does book value per share explain about the business. Book value appeals more to value investors who look at the relationship to the stocks price by using the price to book ratio. It means the actual worth of the asset of a company. 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.
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