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:
Example:
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