Book Value Of Equity Per Share – BVPS
BVPS is a financial measure that shows value of company’s equity per share. The calculation includes original value of company’s common stock which is adjusted for retained earnings, paid dividends and stock buybacks.
Book value formula is : BVPS = (value of common equity)/(# of shares outstandings)
we need to make difference from :
Book Value per Share = (Shareholders’ Equity – Preferred Shares) / Total Number of Outstanding Shares
Good side of BVPS is that it shows value of the company per share, because total value of the company can often be undervalued or overvalued comparing to other companies. On the other hand, this financial measure is only a snap shot of companies’ current situation and it doesn’t show any prediction of the future and its limited view can mislead users of this information. Recommendation is to use BVPS as an addition to other financial measures in order to get better results.