How to Calculate Book Value per Ordinary Share - Formula, Example

How to Calculate Book Value per Ordinary Share - Definition

Definition:

Book value per share is a measure utilized by owners of mutual shares in a company to analyze the level of safety related with every individual share after all debts are paid appropriately.

Formula:

Book value per Share = (Stock holders equity - Preferred Stock) / Total outstanding shares

Example :

International corporation has $2000000 of stockholders equity, $500000 of preferred stock, and total of $300000 shares outstanding during the measurement period. Calculate the Book value per Share of the international corporation.

Given,

Stock holders equity = $2000000 Preferred Stock = $500000 Total outstanding shares = $300000

To Find,

Book value per Ordinary Share

Solution :

Book value per Share = (Stock holders equity - Preferred Stock) / Total outstanding shares = (2000000 - 500000) / 300000 = 1500000 / 300000 = $ 5


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