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| Book Value Per Share - Concept and Formula |
Calculating book value per share is quite simple.
There are two distinct ways to obtain the results, as follows, from the:
1.
Assets
side of the Balance Sheet
2.
Liabilities
Side
Let us take a practical example. Below we present the actual summarised balance sheet of the popular share SJVN Ltd.
|
SJVN
LIMITED
Balance
Sheet as on 31st March 2015
(Rs. in
Crores [1 Crore = 10 Million])
|
|||
|
ASSETS
|
|
LIBILITIES
|
|
|
Fixed Assets
|
9,304.74
|
Equity Capital
|
4,136.63
|
|
|
|
Reserves and
Surplus
|
6,066.41
|
|
Non-Current
Investments
|
11.38
|
Net Worth
|
10,203.04
|
|
Long-term
Loans and Advances
|
188.84
|
|
|
|
Other
non-current assets
|
286.35
|
Long-term
borrowings
|
2,453.42
|
|
|
|
Other
long-term liabilities
|
945.31
|
|
Current Assets
|
4,802.92
|
|
|
|
|
|
Short-term
borrowings
|
0.00
|
|
Intangible
Assets
|
0.22
|
|
|
|
|
|
Other Current
Liabilities
|
992.68
|
|
Total Assets
|
14,594.45
|
Total Liabilities
|
14,594.45
|
Follow the six easy steps given belo:
Method 1: From the Assets Side of the Balance Sheet:
Step
1
Ascertain the total value of all assets from the firm’s ‘Balance Sheet’.
Rs.14,594.45
Crores
Step
2
Deduct following intangible assets, if
any, from the total value of assets, to obtain value of total tangible assets:
1.
Goodwill/
Acquisition Goodwill/ Cost of Control
2.
Brand
Value
3.
Preliminary
and pre-operating expenses
4.
License
fees/ lump sum royalty fees
Tangible
Assets = Rs.14,594.45 – 0.22 = 14,594.23 Crores
Step
3
Determine the total outside liabilities –
that is all liabilities and dues payable to outsiders other than shareholders –
that is all liabilities other than net
worth.
Total
Outside Liabilities = Rs. 14,594.45 – 10,203.04 = 4,391.41 Crores
Step
4
Deduct total outside liabilities from total
tangible assets and obtain the value of net
assets.
Net
Assets = Rs.14,594.23 – 4,391.41 = 10,202.82 Crores
Step
5
Find out the total number of equity
shares. This can read directly from the schedules or by dividing the value of
equity capital by the face value of the share.
Total
Number of Equity Shares = Rs. 4,136.63 ÷ Rs.10 = 413.66 Crores
Step
6
Calculate the book value per share by
dividing the net assets by the total number of equity shares.
Book
Value Per Share = Rs.10,202.82 Crores ÷ 413.66 Crores = Rs.24.66
Method 2: From the Liabilities side of the Balance Sheet
Step
1
Ascertain the net worth. This is the sum of value equity share capital and
reserves and surplus.
Net
Worth = Rs. 4,136.63 + Rs. 6,066.41 = Rs. 10,203.04 Crores
Step
2
Deduct value of intangible assets from
the net worth to obtain tangible net
worth.
Tangible
Net Worth = Rs.10,203.04 – 0.22 = Rs.10,202.82 Crores
Step
3
Divide the tangible net worth by the
total number of equity sahres (Step 5 of Method 1) to obtain the book value per share.
Book Value Per Share = Rs.10,202.82 ÷ 413.66 = Rs.24.66
