Wednesday, September 7, 2016

Definition of Book Value per Share

Meaning/ Definition:


‘Book Value of a Share’ is net assets owned by a company reduced or converted or brought down to a single share. Net assets are total tangible assets reduced by all outside liabilities (other than share capital and reserves).


Significance:


‘Book Value per Share’ forms the denominator in the formula for computing the Price to Book Value, which is one of the most important metric in determining the fair price of a share, the other being ‘Price to Earnings (PE) Ratio.



Formula:


Book Value per Share Fprmula


Example:


Table showing the computation of book value per share

Further Reading:


No comments:

Post a Comment