Book value per share (BVPS) is the common shareholders' equity on a company's balance sheet divided by the number of common shares outstanding. It is the accounting value of the net assets that belong to each common share: what would be left per share if every asset were sold and every liability paid at the amounts on the books.
It is an accounting measure, not a market one. The stock's price is set by trading and can sit far above or below book value.
BVPS is calculated from figures reported in SEC filings. The numerator is common equity, which starts from stockholders' equity attributable to the parent, tagged StockholdersEquity in XBRL, and removes any preferred stock, since preferred holders rank ahead of common holders. Noncontrolling interests are also excluded because they belong to outside owners of subsidiaries. The denominator is common shares outstanding at the balance-sheet date, tagged CommonStockSharesOutstanding or reported on the cover page, net of treasury shares.
Book value reflects historical cost accounting. Property, plant, and equipment are carried at cost less depreciation, and internally developed brands, patents, and customer relationships generally do not appear at all. For asset-light companies whose value comes from intellectual property, BVPS can look very small next to the share price. Large buybacks can shrink or even turn book value negative, while goodwill from acquisitions can inflate it, which is why analysts also track tangible book value per share.
Analysts divide the share price by BVPS to get the price-to-book ratio, which is widely used for banks, insurers, and other companies whose balance sheets are mostly financial assets carried near market value. Growth in BVPS over time, adjusted for dividends, is also a rough measure of how much value management has retained for shareholders.
A: The market values the company at less than the accounting value of its net assets. That can signal undervaluation or doubts about asset values, such as loans that may not be repaid or assets that may need to be written down.
A: Yes. Accumulated losses or large share repurchases can push shareholders' equity below zero. A negative figure is not by itself a sign of distress at a profitable company that has returned a lot of capital.
A: Preferred stockholders have a claim on assets ahead of common stockholders. BVPS is meant to measure what belongs to common shares only.
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