Definition

Book value per share

Book value per share represents the equity a common stockholder has in the net assets of the corporation form owning one share of stock. The net assets of a corporation must be equal to total stockholders’ equity.

Therefore, the formula for computing book value per share when a company has only one class of stock outstanding is:

  Total Stockholders’ Equity ÷ Number of Common Shares Outstanding = Book Value per Share

Book value generally is based on recorded case. Book value per share is useful in determining the trend of stockholder’s per share equity in a corporation. It is also significant in many contracts and in court cases where the rights of individual parties are based on cost information.

Share it:  Cite

More from this Section

  • Process cost system
    Process cost system is a system of accounting used when a large quantity of similar products ...
  • Declaration date
    On the declaration date the board of directors formally declares (authorizes) the cash ...
  • Audit
    Audit is the examination of the books and accounts of a company to examine the books and ...
  • Other expenses and losses
    A non operating activities section of the income statement that shows expense from auxiliary ...
  • Contractual interest rate
    The contractual interest rate, often referred to as the stated rate, is the rate used ...