It stands for book value per share; the ratio of an entity’s book equity (of common stockholders) to the number of shares outstanding. It relates the book value of common equity to the amount of equity shares currently in the hands of common shareholders. Book value of equity per share (BVPS) indicates an entity’s net asset value on a per-share basis. In other words, it signifies that a share’s net asset value- the portion each share outstanding of the entity’s net assets (total assets – total liabilities).
This ratio considers the per-share value of equity on an accrual accounting basis that can be attributed to each common shareholder. It is calculated using the following formula:
BVPS= (total equity – preferred equity) ÷ total shares outstanding
It shows how much common shareholders would be entitled to out of the entity’s equity based on their holdings of its shares. The book value of equity is also known as its net asset value, which is the difference between assets and liabilities.
