Book Value per Share

The Book Value per Share (BVPS) ratio tells an equity shareholder the net worth backing each share they hold. It answers a simple question: if the company were liquidated today, how much would each equity share get after paying off all outsiders and preference shareholders?

The formula is:

Book Value per Share = Equity Shareholders’ Funds / Number of Equity Shares

Equity Shareholders’ Funds means the portion of total shareholders’ funds that belongs to equity shareholders. Since preference shareholders have a prior claim on assets and dividends, their capital is excluded.

Equity Shareholders’ Funds = Shareholders’ Funds – Preference Share Capital

Shareholders’ Funds itself is the sum of share capital (equity + preference), reserves and surplus, and sometimes accumulated profits or losses. So the numerator is the net assets available exclusively for equity shareholders. …