BVPS represents the accounting value of a company's common equity allocated to each outstanding share. It is derived from the balance sheet as BVPS = (Shareholders' equity − preferred equity) / number of common shares outstanding. The figure reflects historical cost and accumulated earnings, not current market value, and can exclude intangible assets such as brand or goodwill depending on accounting treatment.
In fundamental analysis, BVPS is often compared with the market price per share to assess how the stock is valued relative to its accounting backing. A common related metric is the price-to-book ratio (P/B), calculated as price per share divided by BVPS. Analysts may monitor changes in BVPS over time to gauge whether a company is accumulating net assets or experiencing dilution from new shares or impairment charges.
BVPS depends on accounting rules and asset valuations, so it may not reflect current liquidation or replacement costs. Intangible assets, goodwill, and asset write-downs can distort BVPS, and share repurchases reduce the number of shares outstanding, affecting BVPS even if equity is unchanged. It is most informative when used alongside other metrics and qualitative factors.
If a company has total shareholders' equity of $5 billion, preferred equity of $1 billion, and 200 million common shares outstanding, BVPS = ($5B − $1B) / 200M = $20 per share.
Shareholders' equity · Book value · Price-to-book ratio (P/B) · Balance sheet · Tangible book value per share · Intrinsic value