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      BVPS: Calculating Book Value per Share for Stock Valuation

      By Hasnain R

      Published on

      April 11, 2023

      9:48 AM UTC

      Last Updated on

      June 22, 2023

      11:17 AM UTC

      BVPS: Calculating Book Value per Share for Stock Valuation

      When it comes to valuing stocks, there is a multitude of metrics that investors can use to help determine whether a particular investment is a good choice. One of the most commonly used measures is book value per share (BVPS), which provides a useful snapshot of a company’s financial health.

      Not only is it a simple metric to calculate, but it can also provide valuable insights into how a company is being managed and what its prospects for future growth might be.

      Whether you’re a seasoned investor or just getting started, understanding book value per share and how it relates to stock valuation is essential if you want to make informed decisions about your investments.

      So, if you’re ready to dive in and learn more about BVPS, let’s take a closer look at what this metric is and how it can be used to evaluate stocks.

      What Is BVPS (Book Value Per Share)?

      Book value per share is a financial metric that calculates the value of a company’s equity, or net assets, on a per-share basis. It is determined by dividing the total shareholder equity of a company by the number of outstanding shares of stock.

      Shareholder equity is the residual value of a company’s assets after all of its liabilities have been paid off. Book value per share is an important metric for investors because it can provide insight into a company’s intrinsic value.

      When the book value per share is higher than the stock price, it may indicate a company is undervalued and might be worth investing in. In contrast, a lower book value per share may suggest that the stock is overvalued and not a good investment.

      However, it is important to note that book value per share does not take into account intangible assets such as brand value and intellectual property, which can be significant contributors to a company’s overall value.

      Additionally, changes in a company’s accounting methods or asset valuation can impact book value per share, so investors should not rely solely on this metric when making investment decisions.

      What Does Book Value Per Share (BVPS) Tell You?

      It is a financial metric that indicates the amount of a company’s shareholder equity that would be allocated to each outstanding share of its stock if all of its assets were liquidated and all of its debts were paid off.

      It is calculated by dividing the total shareholder equity by the number of outstanding shares.

      Book value per share can give investors an idea of a company’s underlying value, as it represents the net worth of the company on a per-share basis.

      This information can be used to assess the company’s current market value and to compare it to other companies in the same industry.

      If a company’s book value per share is higher than its current market price per share, it could be an indication that the stock is undervalued and may be a good investment opportunity.

      BVPS can also be used to evaluate a company’s financial health over time. If a company’s book value per share is consistently increasing, it could be an indication that the company is profitable and growing.

      On the other hand, if a company’s book value per share is consistently decreasing, it could be a red flag indicating that the company is losing value and may not be a good investment.

      Example of Book Value Per Share

      It is calculated through the BVPS formula by dividing the total shareholder equity (or net assets) by the number of outstanding shares.

      Here’s an example to illustrate the concept:

      Let’s consider a fictional company. A Company has the financial information as shown in the image below:

      Example of Book Value Per Share

      This means that for each share of the Company’s common stock, the book value is $10. It represents the net worth of the company that shareholders would theoretically receive if the company were to be liquidated and all its assets were sold at their book value.

      Investors and analysts often compare the book value per share to the market price per share to assess the stock’s relative valuation.

      If the market price per share is higher than the book value per share, it suggests that the market values the company’s assets, earnings potential, and future growth prospects higher than their book value.

      Conversely, if the market price per share is lower than the book value per share, it may indicate that the stock is undervalued in the market.

      BVPS Formula

      To calculate the book value per share of the Company, we need to divide the total shareholder equity by the number of outstanding shares:

      BVPS Formula

      Therefore, the Company’s book value per share is $5. In other words, if all assets and liabilities of the Company were sold and all liabilities had been paid off, each shareholder would receive $5 for each share they own.
      Now let’s assume that the company’s market price is $7, So the shares are valued higher than their book value. That could indicate investors are optimistic about its future growth.

      On the other hand, if the market price of the Company shares is only $3, this could be a sign that investors are not very optimistic about the company’s future prospects, and the stock may be considered undervalued based on its book value per share.

      How to Calculate Book Value per Share?

      The BVPS formula is used to calculate the book value per share of a company, for that, we need two key pieces of information: the total shareholder equity (or net assets) and the number of outstanding shares. Here’s the step-by-step process to implement the BVPS formula:

      Step 1: Determine the Total Shareholder Equity

      The total shareholder equity can be found on the company’s balance sheet. It represents the net value of the company’s assets after deducting liabilities. It typically includes items such as retained earnings, common stock, and additional paid-in capital.

      Step 2: Find the Number of Outstanding Shares

      The number of outstanding shares can be obtained from the company’s financial statements or disclosures. It represents the total number of shares issued by the company and held by investors.

      Step 3: Divide Total Shareholder Equity by the Number of Outstanding Shares

      Once you have the total shareholder equity and the number of outstanding shares, divide the former by the latter to process the book value per share. The Book value per share formula is:

      Book Value Per Share=Total Shareholder EquityNumber of Outstanding Shares

      For example, let’s say a company has total shareholder equity of $20 million and 5 million outstanding shares. To calculate the Book value per share:

      Book Value Per Share=$20 million5 Million Shares=$4 Per Share

      Therefore, the book value per share for the company would be $4.

      To find the BVPS calendar for a company we can refer to their investor relations website or check financial news websites that report on corporate earnings announcements.

      These sources often provide a schedule of upcoming earnings releases, which include information about key financial metrics like BVPS.

      Uses of Book Value Per Share

      Book value per share has several uses and applications in financial analysis. Here are some of the main purposes and ways in which BVPS is utilized:

      • Valuation Analysis

        Book value per share is used as a valuation metric to assess the relative worth of a company’s common stock. Investors and analysts compare the market price per share to the Book value per share to evaluate whether a stock is undervalued or overvalued.

        If the market price per share is significantly higher than the Book value per share, it may indicate that the stock is trading at a premium, while a price below the Book value per share could suggest an undervalued opportunity.

      • Fundamental Analysis

        It is an important component of fundamental analysis, which involves assessing a company’s financial health and performance.

        By examining changes in Book value per share over time, analysts can evaluate a company’s ability to generate value for shareholders.

        A consistent increase in Book value per share indicates positive growth, while a decline or stagnant Book value per share may raise concerns about the company’s financial position.

      • Comparing Companies

        It can be used to compare the financial health and valuation of different companies within the same industry.

        By comparing the Book value per share of competing companies, investors can gain insights into which company is generating more value for its shareholders and potentially make investment decisions.

      • Assessing Financial Health

        Book value per share is also a useful measure for evaluating a company’s financial stability and solvency. A high Book value per share suggests that the company has accumulated significant net assets, which can act as a buffer against financial risks.

        On the other hand, a low Book value per share could indicate that the company has higher debt levels or is not generating substantial retained earnings.

      • Merger and Acquisition Analysis

        Book value per share is often considered during merger and acquisition (M&A) activities. Acquiring companies may evaluate the Book value per share of the target company to determine if it aligns with their valuation expectations and strategic objectives.

        Comparing the Book value per share of the acquiring and target companies can help in evaluating the impact of the merger on the overall book value and potential dilution or accretion of shareholders’ equity.

      • Investment Decision-Making

        Book value per share, along with other financial ratios and indicators, helps investors in making investment decisions. By analyzing a company’s Book value per share alongside its earnings per share (EPS), price-earnings ratio (P/E ratio), and other valuation metrics, investors can gain a more comprehensive understanding of a company’s financial position and make judgments about the investment potential.

      Market Value Per Share vs. Book Value Per Share

      Market value per share and book value per share are two important financial metrics used by investors to evaluate a company’s stock. Here’s a comparison between these two metrics:

      Market Value Per Share vs. Book Value Per Share

      • Calculation

        Market value per share is calculated by dividing the market price of a company’s shares by the number of outstanding shares, while book value per share is calculated by dividing the total shareholder equity by the number of outstanding shares.

      • Interpretation

        Market value per share reflects the price at which the stock is currently trading in the market, and reflects investor sentiment about the company’s growth prospects and financial performance.

        Book value per share, on the other hand, represents the value of the company’s assets if it were to be liquidated and all liabilities were paid off.

      • Relative Value

        Market value per share can be used to compare a company’s stock price to its peers in the industry or to the overall market, while book value per share can be used to compare a company’s current market price to its intrinsic value.

      • Implications

        A company’s market value per share may be higher or lower than its book value per share. If the market value per share is higher than the book value per share, it could indicate that investors have high expectations for the company’s future growth prospects.

        If the market value per share is lower than the book value per share, it could indicate that the market is undervaluing the company’s assets or that the company’s financial performance is weaker than what investors had anticipated.

      • Usage

        Market value per share is often used by investors to assess the potential for capital gains or losses, while book value per share is often used by investors to assess the potential for long-term value creation.

      How Can Companies Increase Book Value Per Share?

      Companies can increase their book value per share in several ways. Here are a few strategies that companies may use:

      • Retain Earnings

        Companies can increase their book value per share by retaining their earnings rather than distributing them as dividends. Retaining earnings can increase the company’s shareholder equity, which in turn increases the book value per share.

      • Increase Assets

        Book value per share can be increased by investing in research and development or acquiring new businesses. This can lead to an increase in the company’s total shareholder equity, which can increase the book value per share.

      • Reduce Liabilities

        Reduced liabilities can boost book value per share, such as paying off debt or restructuring operations to reduce costs. This can increase the company’s shareholder equity, which can increase the book value per share.

      • Buyback Shares

        Companies can bolster their book value per share by buying back their own shares, which reduces the number of outstanding shares and increases the value of the remaining shares.
        This can lead to an increase in the book value per share, as the company’s shareholder equity is spread over fewer shares.

      • Improve Efficiency

        As companies streamline their operations, reduce costs, and increase revenues, they are able to improve their efficiency and profitability. This can lead to an increase in earnings, which in turn can increase the company’s total shareholder equity and book value per share.

      Importance of Book Value per Share in Stock Valuation

      Here are some key reasons why Book value per share is significant in stock valuation:

      • Valuation Comparison

        Book value per share allows investors and analysts to compare the market price per share to the book value per share. This comparison helps in assessing whether a stock is undervalued or overvalued in the market.

        If the market price per share is significantly higher than the Book value per share, it may indicate that the stock is trading at a premium, potentially signaling an overvalued situation.

        Conversely, a market price per share lower than the Book value per share could suggest an undervalued opportunity.

      • Intrinsic Value Assessment

        It is one of the components used to estimate the intrinsic value of a stock. Intrinsic value refers to the perceived true worth of a company based on its fundamental characteristics.

        By considering the Book value per share alongside other valuation metrics, such as earnings, cash flow, and growth prospects, investors can estimate the intrinsic value of a stock and make judgments about its attractiveness as an investment.

      • Financial Stability Evaluation

        The metric provides insights into a company’s financial stability and solvency. A higher Book value per share indicates that the company has accumulated significant net assets, which can act as a cushion against financial risks.

        It suggests that shareholders have a relatively higher claim on the company’s assets in case of liquidation. On the other hand, a lower Book value per share could suggest higher debt levels or a decline in the company’s net assets, potentially raising concerns about financial stability.

      • Historical Performance Analysis

        Book value per share is used to evaluate a company’s historical performance and track changes over time. By analyzing the trend in Book value per share, investors can assess the company’s ability to generate value for shareholders.

        A consistent increase in Book value per share reflects positive growth and suggests that the company is utilizing its assets efficiently. Conversely, a declining or stagnant Book value per share may indicate a potential erosion of shareholder value.

      • Industry and Peer Comparison

        It allows for meaningful comparisons among companies operating in the same industry or sector. Investors can assess which company within an industry is generating more value for its shareholders by comparing their Book value per share.

        This analysis helps in identifying companies that are financially strong and have a potential competitive advantage.

      • Merger and Acquisition Considerations

        Book value per share plays a crucial role in merger and acquisition activities. Acquiring companies often evaluate the Book value per share of the target company as part of their due diligence.

        The Book value per share comparison helps in determining the impact of the merger on the overall book value and potential dilution or accretion of shareholders’ equity.

      Factors Affecting Book Value Per Share

      Several factors can affect the BVPS of a company. These factors reflect changes in the company’s financial position, capital structure, and profitability. Here are some key factors that can impact Book value per share:

      • Retained Earnings

        Retained earnings are a significant component of shareholder equity and contribute to Book value per share. When a company generates profits, it can choose to distribute them to shareholders as dividends or retain them for reinvestment in the business.

        Higher retained earnings result in an increase in shareholder equity and subsequently raise Book value per share.

      • Share Issuances and Buybacks

        The issuance or buyback of shares can impact the Book value per share. If a company issues new shares to raise capital, it dilutes existing shareholders’ ownership and reduces Book value per share.

        Conversely, share buybacks, where a company repurchases its shares, can increase Book value per share by reducing the number of outstanding shares.

      • Changes in Asset Values

        Fluctuations in the value of a company’s assets can affect Book value per share. If the fair market value of assets increases, it can result in higher shareholder equity and an increase in Book value per share. On the other hand, if asset values decline, it can lead to a decrease in BVPS.

      • Debt and Liabilities

        The level of debt and liabilities a company carries impacts Book value per share. Higher debt levels increase the company’s liabilities, reducing shareholder equity and ultimately lowering Book value per share. Conversely, paying off debt or reducing liabilities can improve Book value per share.

      • Intangible Assets

        Intangible assets, such as patents, trademarks, and goodwill, are not typically included in the book value calculation.

        These assets are often recorded at their historical cost and may not fully reflect their true value. As a result, changes in the value of intangible assets may not have a direct impact on Book value per share.

      • Stock Splits and Reverse Splits

        Stock splits and reverse splits can affect Book value per share by changing the number of outstanding shares. In a stock split, the number of shares increases, while the individual share price decreases proportionately.

        This does not impact Book value per share, as the total shareholder equity remains the same. In a reverse split, the number of shares decreases, while the share price increases proportionately. This can increase Book value per share.

      • Acquisitions and Mergers

        When a company acquires or merges with another company, the impact on Book value per share depends on the purchase price and the assets acquired. If the purchase price exceeds the fair value of the acquired company’s net assets, it may lead to goodwill, which is recorded as an intangible asset.

        This can increase Book value per share. Conversely, if the purchase price is below the fair value of net assets, it may result in a decrease in Book value per share.

      Other Stock Valuation Metrics

      In addition to BVPS, there are several other stock valuation metrics that investors and analysts use to assess the worth of a company’s stock.

      These metrics provide insights into different aspects of a company’s financial performance and its relative valuation in the market. Here are some commonly used stock valuation metrics:

      • Price/Earnings Ratio (P/E Ratio)

        The price/earnings ratio compares the market price of a stock to its earnings per share (EPS). It is calculated by dividing the market price per share by the EPS. The P/E ratio reflects how much investors are willing to pay for each dollar of earnings generated by the company.

        A higher P/E ratio suggests that investors have higher expectations for future growth, while a lower P/E ratio may indicate an undervalued stock.

      • Dividend Yield

        The dividend yield is calculated by dividing the annual dividend per share by the market price per share. It represents the percentage return on investment from dividends. The dividend yield is often used by income-oriented investors to identify stocks that provide a steady income stream.

        A higher dividend yield implies a higher return on investment through dividends, while a lower yield may indicate a lower income potential.

      • Price/Sales Ratio (P/S Ratio)

        The price/sales ratio compares the market price per share to the company’s revenue per share. It is calculated by dividing the market price per share by the sales per share. The P/S ratio is used to assess the company’s valuation relative to its revenue generation.

        A higher P/S ratio suggests that investors are willing to pay a premium for each dollar of sales, indicating potential high growth prospects or market dominance.

      • Price/Book Ratio (P/B Ratio)

        The price/book ratio compares the market price per share to the book value per share. It is calculated by dividing the market price per share by the Book value per share. The P/B ratio reflects the market’s valuation of a company’s net assets relative to its market price.

        A higher P/B ratio suggests that investors are willing to pay a premium for each dollar of net assets, indicating confidence in the company’s value and potential growth.

      • Free Cash Flow (FCF)

        Free cash flow represents the cash generated by a company from its operations after deducting capital expenditures. It is an indicator of the company’s ability to generate excess cash that can be used for dividends, debt repayment, investments, or other purposes.

        Positive and growing free cash flow is generally seen as a positive sign and can support a company’s valuation.

      • Earnings Growth Rate

        The earnings growth rate measures the annual percentage increase in a company’s earnings over a specific period. It provides insights into the company’s ability to generate increasing profits.

        Companies with high and consistent earnings growth rates may be valued higher by investors due to their potential for future earnings expansion.

      • Return on Equity (ROE)

        Return on equity measures the profitability of a company relative to its shareholder equity. It is calculated by dividing the company’s net income by its shareholder equity.

        ROE reflects how efficiently a company is using its equity capital to generate profits. A higher ROE indicates better profitability and may lead to a higher stock valuation.

      Limitations of Book Value per Share

      While book value per share is a useful valuation metric, it also has certain limitations and drawbacks that investors and analysts should consider. Here are some of the key limitations of Book value per share:

      • Historical and Accounting Basis

        Book value per share is based on historical accounting values and does not consider the market value or future earning potential of a company.

        It relies on the historical cost of assets and may not reflect their current fair market value. As a result, Book value per share may not accurately capture the true economic value of a company.

      • Intangible Assets and Intellectual Property

        Book value per share does not account for the value of intangible assets such as patents, trademarks, brand value, or intellectual property.

        These assets can be valuable contributors to a company’s overall worth, but they are not typically included in the book value calculation. As a result, Book value per share may underestimate the true value of a company, particularly in knowledge-based or technology-driven industries.

      • Debt and Liabilities

        Book value per share does not directly reflect the impact of debt and liabilities on a company’s valuation. A company with high levels of debt can have a lower Book value per share, even if it has valuable assets.

        Book value per share does not provide a complete picture of a company’s financial health or its ability to meet its obligations.

      • Depreciation and Amortization

        Book value per share can be affected by depreciation and amortization of assets over time. As assets age or become obsolete, their recorded value decreases, which can result in a decline in Book value per share.

        However, this depreciation may not accurately reflect the actual value or useful life of the assets, particularly in industries where asset values do not correspond with their recorded depreciation.

      • Market Value Fluctuations

        Book value per share does not account for market fluctuations or investor sentiment. The market price per share may differ significantly from the book value per share due to factors such as supply and demand dynamics, market sentiment, future growth expectations, and broader economic conditions.

        Therefore, relying solely on Book value per share may not accurately reflect the market’s perception of a company’s value.

      • Differences Between Industries

        Book value per share may have varying significance and relevance across different industries. Some industries, such as technology or service-based sectors, may rely more heavily on intangible assets and intellectual property, making Book value per share less informative for their valuation.

        In contrast, industries with substantial tangible assets, such as manufacturing or utilities, may find Book value per share more aligned with their value assessment.

      • Limitations in Comparing Companies

        Book value per share may not be directly comparable between companies, particularly across different industries or sectors.

        Companies with different capital structures, growth prospects, and asset compositions may have varying Book value per share ratios, making it challenging to make accurate comparisons solely based on Book value per share.

      Calculating Book Value Per Share With Real Companies

      To calculate the book value per share for the given companies, we need the relevant financial information from their financial statements. As of the cutoff date in March 2023, here are the calculations for the following companies:

      Microsoft (MSFT)

      • Total Shareholders’ Equity: $194.68 Billion
      • Number of Outstanding Shares: 7.44 Billion
      • Book Value Per Share = $194.68 Billion / 7.44 Billion = $26.16

      Goldman Sachs (GS)

      • Total Shareholders’ Equity: $117.51 Billion
      • Number of Outstanding Shares: 346.6 Million
      • Book Value Per Share = $117.51 Billion / 346.6 Million = $268.99

      Cincinnati Financials (CINF)

      • Total Shareholders’ Equity: $10.74 Billion
      • Number of Outstanding Shares: 157.2 Million
      • Book Value Per Share = $10.74 Billion / 157.2 Million = $68.4

      Berkshire Hathaway (BRK-B)

      • Total Shareholders’ Equity: $504.55 Billion
      • Number of Outstanding Shares: 1.3 Billion
      • Book Value Per Share = $504.55 Billion / 1.3 Billion = $388.11

      Lockheed Martin (LMT)

      • Total Shareholders’ Equity: $9.646 Billion
      • Number of Outstanding Shares: 254.7 Million
      • Book Value Per Share = $9.646 Billion / 254.7 Million = $37.97

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      Conclusion

      Book value per share (BVPS) and market value per share are both important financial metrics used to evaluate a company’s stock.

      Book value per share is calculated by dividing the total shareholder equity by the number of outstanding shares, while market value per share is calculated by dividing the current market price of a company’s shares by the number of outstanding shares.

      While book value per share represents the theoretical value of a company’s shares if it were to be liquidated, the market value per share represents the value that investors are willing to pay for a share of the company based on various factors such as its growth potential, financial performance, and future prospects.

      Investors use both book value per share and market value per share to make informed investment decisions, and companies may use various strategies to increase their book value per share, such as retaining earnings, increasing assets, reducing liabilities, buying back shares, and improving efficiency.

      FAQs

      Is A Negative BVPS Good?

      A negative book value per share indicates that a company’s liabilities exceed its assets, which means that the company has negative shareholder equity.

      In general, a negative BVPS stock is not considered a good sign for investors, as it suggests that the company may be in financial distress and may have difficulty meeting its financial obligations.

      However, there are some cases where a negative BVPS stock may be acceptable or even desirable. For example, in the technology sector, startups and high-growth companies may have negative BVPS due to heavy investments in research and development, which can lead to negative earnings in the short term.

      In such cases, investors may be willing to overlook a negative book value per share if they believe that the company has strong growth potential and a solid business model.

      Why Would A Company Trade Below Book Value?

      A company may trade below its book value for several reasons, including

      Poor Financial Performance: If a company is struggling to generate profits or has a history of losses, investors may become less optimistic about its future prospects, which can lead to a decline in its stock price.

      This can result in the company trading below its book value. Market Trends: Market trends and sentiment can also impact a company’s stock price. If the broader market or industry is experiencing a downturn or negative sentiment, it can lead to a decline in the company’s stock price, which can result in the company trading below its book value.

      Investor Perception: Investor perception and confidence in a company can also impact its stock price. If investors perceive a company as having poor management or facing other risks, they may be less willing to invest in the company, which can result in the company trading below its book value.

      Liabilities: If a company has significant liabilities, such as high levels of debt or outstanding legal claims, it can impact its book value and lead to a decline in its stock price.

      Asset Value: In some cases, a company’s assets may be overvalued or may not be easily converted to cash, which can lead to a decline in its book value and stock price.

      How Do Investors Value A Company?

      Investors use several methods to value a company, including

      Fundamental Analysis

      This approach involves analyzing a company’s financial statements, such as the balance sheet, income statement, and cash flow statement, to evaluate its financial performance and health. Key financial ratios, such as the price-to-earnings ratio (P/E ratio), price-to-book ratio (P/B ratio), and price-to-sales ratio (P/S ratio), can also be used to assess a company’s value relative to its peers.

      Discounted Cash Flow (DCF) Analysis

      This approach involves estimating a company’s future cash flows and discounting them to their present value using a discount rate. This method is commonly used to value companies with predictable cash flows, such as utilities or real estate investment trusts.

      Comparable Analysis

      This approach involves comparing a company’s financial performance and ratios to those of similar companies in the same industry. This can provide insights into a company’s relative value and market position.

      Asset-Based Valuation

      This approach involves estimating the value of a company’s assets and subtracting its liabilities to arrive at its net asset value (NAV). This method is commonly used to value companies with significant tangible assets, such as manufacturing or energy companies.

      Market Capitalization

      This approach involves multiplying a company’s current stock price by the number of outstanding shares to arrive at its market capitalization. This provides a measure of the company’s total value as perceived by the market.

      What Does Book Value Per Share Mean in Stocks?

      In stocks, Book value per share refers to a financial metric that represents the value of a company’s net assets attributable to each outstanding share of its common stock.

      It is calculated by dividing the total shareholders’ equity (or book value) by the number of outstanding shares of common stock. Book value per share reflects the theoretical value that shareholders would receive if a company were to liquidate its assets and pay off its liabilities.

      It provides insights into the net worth of a company on a per-share basis, indicating the amount of equity that shareholders theoretically own. Investors and analysts use Book value per share as one of many factors to assess a company’s financial health, growth potential, and relative valuation.

      A high Book value per share suggests a larger amount of net assets per share, which can indicate a solid financial position and potentially lower investment risk. On the other hand, a low Book value per share may suggest a higher risk or undervaluation.

      What is the Difference Between EQUITY and Book Value Per Share?

      Equity and Book Value Per Share are related concepts but represent different aspects of a company’s financial position.

      Equity

      Equity refers to the ownership interest or residual claim of shareholders in a company’s assets after deducting liabilities. It represents the net worth of a company and is calculated as the difference between total assets and total liabilities.

      Equity represents the ownership stake that shareholders hold in the company and can be seen as a measure of the company’s value. It represents the value that would be left for shareholders if all the company’s assets were sold and liabilities were paid off.

      Book Value Per Share

      Book value per share, on the other hand, is a financial ratio that measures the book value or equity on a per-share basis.

      It is calculated by dividing the total shareholders’ equity by the number of outstanding shares of common stock. Book value per share provides the value of the net assets that can be attributed to each share of common stock.

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