The Book Value per Common Share Calculator allows you to calculate the per-share value of a company based on common shareholders' equity in a company.
|Book value per Share|
The market rate of a company's stock defines the price a shareholder is willing to pay for a company's shares. On the other hand the book value per common share shows the real value of a company's stock. When compared to the market value the book value per common share can show us how a company's stock is valued.
Book value per common share or book value per share method calculates the per share value of a company's stock based on common shareholder's equity in the company. This is the value that will remain for the common shareholders after the liquidation of all assets and clearing all the debts, in case the company dissolves. Let's have a look at the calculation method of this ratio.
You can calculate the book value per common share using the following formula:
It can be broken down to two following steps:
The first step: The preferred stock is subtracted from the total shareholders' equity in the first step. The reason behind this deduction is because as the name suggests the preferred stock are paid first as soon as the debts are paid. This will leave behind the book value of the company.
The second step: The second step is to divide the results by the total shares outstanding.
Understanding the above said calculations are crucial for you if you are going to calculate it manually. Alternatively, you can do these calculations using an online calculator such as book value per common share calculator created by iCalculator. Let's have a look at how a calculator will do this for you.
Enter the following details into the calculator:
On the basis of above inputs the calculator will provide you with book value per common share. The book value per common share calculator is designed by iCalculator to reduce your stress of manual calculations. Besides the obvious advantages like the ease of use and guarantee of precision there are various other benefits you can derive from the calculator. Learn about them below:
The results: The calculator will show you the book value per share of your company, which can be used to compare with the market value of your stock. If the book value per share exceeds the market value, the company's stock is considered undervalued.
Despite these advantages, there are some drawbacks of using this method, such as:
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