Book Value Per Share (BVPS)

Book value per share (BVPS) is a figure that evaluates the value of a company's claims based on its net assets.

Author: Laila Al-Eisawi
Laila Al-Eisawi
Laila Al-Eisawi
I completed my Bachelor of Arts in Economics at New York University Abu Dhabi where I got the opportunity to explore various courses within Economic Growth, Development, Behavioral, and other areas with applications to the real world. My course experience and internships have helped me grow and develop my presentation and writing, analytical,
Reviewed By: Elliot Meade
Elliot Meade
Elliot Meade
Private Equity | Investment Banking

Elliot currently works as a Private Equity Associate at Greenridge Investment Partners, a middle market fund based in Austin, TX. He was previously an Analyst in Piper Jaffray's Leveraged Finance group, working across all industry verticals on LBOs, acquisition financings, refinancings, and recapitalizations. Prior to Piper Jaffray, he spent 2 years at Citi in the Leveraged Finance Credit Portfolio group focused on origination and ongoing credit monitoring of outstanding loans and was also a member of the Columbia recruiting committee for the Investment Banking Division for incoming summer and full-time analysts.

Elliot has a Bachelor of Arts in Business Management from Columbia University.

Last Updated:November 1, 2023

What Is Book Value Per Share (BVPS)?

Book value per share (BVPS) is a figure that evaluates the value of a company's claims based on its net assets. It measures a company's book value per share by generating a ratio of equity to outstanding shares

With common stock factored into the denominator, the ratio reflects the amount a common shareholder would acquire if or when the particular company is liquidated. 

In other words, the BVPS is essentially how much would remain if the shareholders sold the company's assets and paid its debts. 

Furthermore, the BVPS reflects the company's stock value: 

  • If the market value is lower than the book value per share, this may show that the stock price is undervalued. 

  • If the value exceeds the BVPS, the shares may be overvalued, thus suggesting caution before proceeding. 

Suppose a stock is being traded at a lower price than its BVPS. It then highlights that the market values the company at a lower level than its liquidation value. 

However, this does not indicate that the stock will become a good investment. So, one must consider other related factors before deciding about the acquisition. 

BVPS does not focus on other factors, like the company's growth potential in the future or market conditions, and thus, should not be used alone in analyzing the company's shares' value. 

The BVPS is rarely ever used internally and is primarily utilized by investors as they assess the price of a company's stock. This factors into their investment decisions as they consider potential opportunities. 

Understanding Book Value Per Share (BVPS)

The book value per share is significant for investors as it helps them determine the intrinsic value of a given company's shares. 

In addition to that, it is only sometimes used with others. Instead, it is used with other financial metrics, like the price-to-earnings ratio (P/E ratio) and price-to-book ratio (P/B ratio). These measures help reveal crucial information about the company's financial performance and prices

Moreover, the BVPS in one industry may not be directly comparable to another. Thus, when comparing, the companies should be within the same industry to avoid confusion or misleading deductions. 


The book value per share provides useful information and should be used alongside other measures for a more accurate company valuation. However, there are two main issues that those using the metric should know. 

One problem is that the BVPS is not forward-looking. So, it should only sometimes be compared to other measures, like the market value per share. MVPS is forward-looking with the investment community’s perception of the value of the claims, while BVPS is more on the accounting side.

The second problem is that the book value per share undervalues some assets. For example, the value of a brand, created by marketing expenditures over time, might be the company’s main asset and yet does not show up in the calculation of the BVPS.

In another example, in-house R&D may be pretty high but charged as an expense in many cases, thus creating a disparity between book value and market value, which distorts the overall picture. 

Formula for Book Value Per Share

The book value per share is calculated by subtracting the preferred stock from the stockholders’ total equity (book value) and dividing that by the average number of outstanding shares. 

As such, the formula looks as follows:

Book Value Per Share = (Stockholders' Equity - Preferred Stock) ÷ Average Shares Outstanding 

For example, let us assume we are studying a hypothetical company, Company A. Now, suppose during a specific period, Company A has:

  • $16,000,000 in stockholders’ equity

  • $4,000,000 in preferred stock

  • The average number of 3,000,000 outstanding shares 

Calculating the BVPS for this specific period and these numbers would be:

($16,000,000 – $4,000,000) ÷ 3,000,000 

= $4.00 book value per share 


Using the average number of shares in the formula is essential since the number at the end of the period may factor in a recent buyback or stock issuance, distorting the figure. 

Book Value Per Share (BVPS) FAQs

Researched and authored by Laila AL-Eisawi | LinkedIn

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