Book value per share is total common equity divided by the # of common shares outstanding, where total common equity is equal to stockholders’ equity minus preferred equity. The “book value” (common equity) is the accounting value of the firm (i.e., net assets). This is theoretically the amount that common shareholders would receive if all the assets were sold for their book values and the company’s debts were paid. It is also known as the equity value per share Book value per share is sometimes used to determine if a stock is undervalued. If a company’s market value is less than its book value, then value investors would say to buy the stock. — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people. — SUBSCRIBE FOR A FREE …
