What is book value per share?
Book value per share is common equity divided by shares outstanding. It tells you what each common share is worth on the books — the net assets left for the common holders, spread over the shares in issue.
A BVPS of $5.00 means $5.00 of common equity stands behind each share. Value investors compare it with the market price: a share trading at $4.00 sells below book value, a share trading at $10.00 sells at twice book value.
The book value per share formula
Book value per share = (total shareholders’ equity − preferred equity) ÷ shares outstanding. Common equity = total equity − preferred equity. Two more formulas turn the BVPS around: common equity needed at a target = target BVPS × shares outstanding, and shares outstanding allowed at a target = common equity ÷ target BVPS. Total equity needed at a target = common equity needed + preferred equity.
Step 1: work out the total equity
Total shareholders’ equity is what the company owns after debts: total assets minus total liabilities, straight from the balance sheet. In our example it is $10,000,000. Use the same balance sheet date for the equity and the share count, and watch for one-off writedowns — a single impairment can shrink the equity without the business changing.
Step 2: work out the preferred equity
Preferred equity is what the preferred holders are owed first — the liquidation preference on the balance sheet, or the preferred stock line. In our example it is $2,000,000. If the company has no preferred stock, the preferred equity is $0 and the common equity equals the total equity.
Step 3: work out the common equity
Common equity is total equity minus preferred equity: $10,000,000 − $2,000,000 = $8,000,000. This is the part that belongs to the common holders — the preferred holders are paid first, so what is left is theirs.
Step 4: work out the shares outstanding
Shares outstanding is the number of common shares in issue — the weighted average for the year, or the latest count from the balance sheet. In our example it is 1,600,000. Use the common shares only: preferred shares are already handled by subtracting the preferred equity.
Step 5: divide the common equity by the shares outstanding
Divide $8,000,000 by 1,600,000: $8,000,000 ÷ 1,600,000 = $5.00. That is the whole calculation. The common equity needed for a $6.00 BVPS is $6.00 × 1,600,000 = $9,600,000 — and the shares outstanding allowed for a $6.00 BVPS is $8,000,000 ÷ $6.00 = 1,333,333.33. Try it on the book value per share calculator and check the answer against your own arithmetic.
Three worked examples
Example 1 — the main example. $10,000,000 of total equity, $2,000,000 of preferred equity, 1,600,000 shares: $10,000,000 − $2,000,000 = $8,000,000, and $8,000,000 ÷ 1,600,000 = $5.00. For a $6.00 target: common equity needed is $6.00 × 1,600,000 = $9,600,000, total equity needed is $9,600,000 + $2,000,000 = $11,600,000, and shares allowed is $8,000,000 ÷ $6.00 = 1,333,333.33.
Example 2 — the rounding trap. $11,599,999 of total equity: $11,599,999 − $2,000,000 = $9,599,999, and $9,599,999 ÷ 1,600,000 = $5.999999375 — it displays as $6.00 but sits below the $6.00 target.
Example 3 — the negative case. −$2,000,000 of total equity and no preferred equity: the common equity is −$2,000,000, and −$2,000,000 ÷ 1,600,000 = −$1.25 — a negative BVPS, shown with a note, never hidden.
One reverse to check your answer
Work it backwards: the smallest whole-dollar total equity for the BVPS to reach $6.00 is $11,600,000 — at $11,600,000 the BVPS is $6.00, exactly $6.00, and at $11,599,999 it is $5.999999375. The largest whole-share shares outstanding for the BVPS to stay at or above $6.00 is 1,333,333 — at 1,333,333 the BVPS is $6.0000015 unrounded, and at 1,333,334 it is $5.999997. If your answer does not survive the reverse, the arithmetic is wrong.
What a good BVPS looks like
$0.00 — no common equity. The preferred holders own everything the company owns, and each common share carries zero book value.
Below the market price — the usual case. A $5.00 BVPS against a $10.00 market price is a price-to-book ratio of 2 — the market pays twice book value, common for growing companies.
Above the market price — a possible bargain. A $5.00 BVPS against a $4.00 market price is a price-to-book ratio of 0.8 — the share sells below book value, which value investors look for, though it can also mean the market expects writedowns.
The $5.999999375 rounding trap
The BVPS is displayed to two decimals, half-up — and the display can lie by a hair. $11,599,999 of total equity gives a BVPS of $5.999999375 unrounded: it displays as $6.00, but it sits below the $6.00 target — so $11,599,999 is not enough to reach $6.00, and the smallest whole-dollar total equity that reaches it is $11,600,000. Print the unrounded BVPS when the answer is close to a round target — the calculator does.
What a negative BVPS means
At −$2,000,000 of total equity, the BVPS is −$1.25. Negative common equity means the preferred holders are owed more than the company owns — a data problem, not a real value. The calculator shows the negative figure with a note, never hides it.
What if the shares outstanding is zero?
At 0 shares outstanding the BVPS is undefined — there are no shares to divide the common equity by. The calculator shows the BVPS as undefined with that note, never a crash and never a made-up number. No common-equity-needed figure is printed for that case, because the target math needs a share count.
How it differs from the price-to-book ratio
The price-to-book ratio is the market price divided by the BVPS — it tells you what the market pays for each dollar of book value. The BVPS is common equity divided by shares outstanding — it tells you what each share is worth on the books. A share can have a low BVPS and a high price-to-book ratio: the price is high, the book value is thin. Read both together — the price-to-book ratio calculator covers the ratio side, and the book value per share calculator works out the BVPS. It also differs from earnings per share — see the earnings per share calculator — and from the dividend payout ratio — see the dividend payout ratio guide.
The mistakes to avoid
Mixing dates: total equity and the share count from different balance sheets answer nothing.
Forgetting the preferred equity: subtracting nothing when preferred stock exists overstates the common equity.
Trusting the display: print the unrounded figure when the answer is close to the target.
Reading book value as market value: book value is accounting, not what the market will pay.
Ignoring intangibles: goodwill and brands can inflate the equity without adding real value.