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Book value per share can vary significantly because every company is different. Factors such as assets, liabilities, and number of common shares can be influenced by company size, industry, and structure. There is no “good” or “bad” book value per share. Book value per share is better used as a comparison tool.
Net book value is the net value of an asset carried on its balance sheet. Net book value results from the accounting technique of depreciating or amortizing the value of an asset: a company gradually “uses up” or expenses the cost of a fixed asset over the asset’s useful life.
Here's a simplified example of how to find the book value of a publicly-traded company. In Q1 of 2021, Microsoft had a total asset value of $301 billion and the total liability balance was $177 billion. $301 billion minus $177 billion = $124 billion. This gives Microsoft an estimated book value of $124 billion. How to Calculate Book Value per Share
P/B ratio = Stock Price / Book Value per share. Book value: 2,000 - 1,500 = 500 (note that this is the same as owners' equity) Book value per share: 500 / 100 = $5. P/B ratio = $6 / $5 = 1.2. A P/B ratio of less than 1.0 can indicate that a stock is undervalued, while a ratio of greater than 1.0 may indicate that a stock is overvalued.
The book value would be: $10,000 - $1,429 = $8,571. To calculate depreciation for each following year, the company would multiply the book value (cost - MARC depreciation % for that year) of the office furniture by the corresponding depreciation rate for that year. Note: This is a simple example of MACRS.
How Does Tangible Book Value Per Share (TBVPS) Work? The formula for TBVPS is: TBVPS = Tangible Assets/Shares Outstanding. Let's assume Company XYZ has $10 million in tangible assets (which appears on the balance sheet) and 1 million shares outstanding. According to the formula, Company XYZ's TBVPS is: TBVPS = $10,000,000/1,000,000 = $10.00
The book value of Company ABC's assets is $10 million, but for various good reasons, Company XYZ pays $15 million for Company ABC. Because Company XYZ paid $15 million for $10 million worth of assets, Company XYZ records $5 million of goodwill as an asset on its balance sheet .
An appraisal estimates the fair market value (FMV) of the PP&E at $7 million. The book value of all the other assets and liabilities is equal to FMV. The fair value of XYZ's assets and liabilities is $2,000,000 + $7,000,000 - $4,000,000 = $5,000,000. We leave out the goodwill listed on XYZ's balance sheet because it's not a real asset purchased ...
Book value is the value of a company reported on the balance sheet. The report uses accounting standards to value assets, liabilities, and equity. The amount of shareholder equity reported on the balance sheet is defined as the book value of shareholder capital. Both of these numbers are used by investors and shareholders to determine value.
NAV = (Market Value of All Securities Held by Fund + Cash and Equivalent Holdings - Fund Liabilities) / Total Fund Shares Outstanding Let's assume at the close of trading yesterday that a particular mutual fund held $10,500,000 worth of securities, $2,000,000 of cash, and $500,000 of liabilities.