Book value per share
What is Book value per share?
Book value per share divides accounting common shareholders' equity by an applicable common share count, indicating recorded net assets attributable to each share. It is an accounting allocation rather than liquidation value or intrinsic value. Historical cost, fair value, goodwill, unrecognized internally developed assets, preferred claims, comprehensive income, treasury shares, and the chosen tangible-book adjustments all influence comparability and interpretation. Asset quality, earning power, and liability completeness must be evaluated beyond the ratio.
Asset quality, earning power, realizability, and liability completeness must be assessed independently of the reported ratio.
How it is calculated
Start with equity attributable to the parent and subtract preferred equity or other claims to isolate common book value, then divide by common shares. Analysts may use ending shares for a point-in-time measure. Tangible book value further removes goodwill and selected intangibles, but adjustment definitions vary and should be reconciled.
Example
A company has $900 million parent equity, including $100 million preferred equity, and 80 million common shares. Common BVPS is $10. If $240 million goodwill is removed, tangible BVPS is $7. A depositary ratio or multiple common classes must be handled consistently before comparing the result with market price.
How investors use it
BVPS supports price-to-book valuation, return-on-equity analysis, and balance-sheet assessment, particularly where recorded assets and liabilities connect closely to earning capacity. Growth comes from retained earnings, issuance above book, and other comprehensive income, while losses, dividends, buybacks, and impairments can reduce it. Per-share movement can differ from total equity movement.
Limitations
Book value mixes historical cost, fair value, and estimates and may omit internally developed brands, software, data, or human capital. It can overstate obsolete assets or understate valuable franchises. Buybacks above book reduce BVPS mechanically, which does not prove value destruction. Negative equity makes price-to-book difficult, and sector comparability varies sharply.
Practical checklist
Confirm attribution, preferred claims, noncontrolling interests, share count, goodwill, intangibles, accumulated other comprehensive income, and treasury stock. Reconcile equity roll-forwards and corporate actions. Compare BVPS with profitability, asset quality, leverage, and market value. Use tangible and reported versions transparently, and avoid valuing an operating business solely from accounting net assets.
Also known as: BVPS
Sources and further reading
- Financial Ratio List, CFA Institute