What is book value with example?
For example, if Company XYZ has total assets of $100 million and total liabilities of $80 million, the book value of the company is $20 million.
In a broad sense, this means that if the company sold off its assets and paid down its liabilities, the equity value or net worth of the business would be $20 million..
What is the book value of a share?
Book value per share (BVPS) takes the ratio of a firm’s common equity divided by its number of shares outstanding. Book value of equity per share effectively indicates a firm’s net asset value (total assets – total liabilities) on a per-share basis.
Why is book value per share important?
Book value is considered important in terms of valuation because it represents a fair and accurate picture of a company’s worth. … This means that investors and market analysts get a reasonable idea of the company’s actual worth. Book value is primarily important for investors using a value investing strategy.
What does value per share mean?
Asset value per share has a number of applications. Frequently, the term refers to the total value of a fund’s investments divided by its number of shares outstanding. … (Net) Asset value per share can also refer to a company’s fair value minus its total liabilities, divided by its number of shares outstanding.
Is a high book value per share good or bad?
The book value per share is the amount of the assets that will go to common equity in the event of liquidation. So higher book value means the shares have more liquidation value. Strictly speaking, the higher the book value, the more the share is worth.