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

  • Owner’s equity statement
    Owner’s equity statement is a financial statement that summarizes the changes in owner’s ...
  • Budgetary control
    The use of budgets in controlling operations is known as budgetary control which consists ...
  • Cost method
    Cost method is an accounting method in which the investment in common stock is recorded ...
  • Accountant
    Accountant is a person who has the education and experience to evaluate the significance ...
  • Flexible budget
    Flexible budget is a projection of budget data for various levels of activity. In essence, ...