What Is Book Value per Share (BVPS)? Formula and How to Use It

By Markets & Investing DeskUpdated Nov 10, 2026

Definition

Book value per share is a company's common shareholders' equity divided by its common shares outstanding, after subtracting any preferred equity from total equity.

Key takeaways

Preferred equity is subtracted because preferred stockholders are paid before common holders in a liquidation.
Dividing the market price per share by BVPS gives the price-to-book ratio, and a P/B below 1 can signal undervaluation.
Buying back stock below book value raises BVPS, while buying back above book value lowers it.
BVPS tends to understate asset-light firms because internally developed brands, software and patents are left off the balance sheet.

Book value per share (BVPS) is the portion of a company’s common shareholders’ equity attributable to each outstanding share of common stock. It is calculated from the balance sheet: total equity, minus any preferred equity, divided by the number of common shares outstanding. In theory, it is what each common shareholder would receive if the company sold its assets at their recorded values, paid off all its liabilities and distributed what remained.

Book value, also called net asset value, is total assets minus total liabilities. That figure equals total shareholders’ equity on the balance sheet. BVPS narrows it to the equity that belongs to common shareholders and spreads it across their shares.

The BVPS formula

BVPS = (Total shareholders’ equity − Preferred equity) ÷ Common shares outstanding

A few points about the inputs:

Preferred equity is removed because, in a liquidation, preferred stockholders are paid before common stockholders. What is left is common equity.
Shares outstanding usually means common shares outstanding at the balance sheet date, excluding treasury shares (stock the company has bought back and holds). Some analysts use a weighted average share count instead; the choice should be stated when comparing figures.
Where to find the numbers: total equity, preferred stock and the share count appear on the balance sheet and its notes in the annual or quarterly report.

Interpreting the number

BVPS on its own says little. Its main use is comparison with the market price per share. Dividing the share price by BVPS gives the price-to-book (P/B) ratio:

P/B = Market price per share ÷ BVPS

A P/B below 1 means the stock trades for less than the book value of its common equity. Value investors often read that as possible undervaluation, since a buyer could in theory acquire the company, liquidate it at book value and collect more than it paid. In practice, liquidation rarely realizes book values exactly, and a low P/B can also reflect weak profitability, overstated assets or expected losses. A P/B well above 1 means investors are paying for earning power the balance sheet does not capture.

Tracking BVPS over time, for example on a year-over-year basis, shows whether a company is building equity for its common shareholders or eroding it.

A hypothetical company, ABC Manufacturing, reports:

Total assets: $50 million
Total liabilities: $38 million
Total shareholders’ equity: $12 million
Preferred equity: $2 million
Common shares outstanding: 1 million

Common equity is $12 million − $2 million = $10 million, so BVPS = $10 million ÷ 1 million = $10 per share. If the stock trades at $8, the P/B ratio is 0.8.

Retaining earnings. Suppose ABC earns $500,000 and pays no dividend. The profit flows into retained earnings, lifting common equity to $10.5 million and BVPS to $10.50.

Buying back stock. A buyback reduces the share count, but the cash paid also reduces equity. The effect depends on the price relative to BVPS. Starting again from $10 million of common equity and 1 million shares:

Buyback	Cost	Common equity after	Shares after	BVPS after
100,000 shares at $8	$800,000	$9.2 million	900,000	$10.22
100,000 shares at $15	$1.5 million	$8.5 million	900,000	$9.44

Repurchasing below book value raises BVPS for the remaining shareholders; repurchasing above it lowers BVPS. Issuing new shares works the other way: selling stock above BVPS raises it, and selling below dilutes it. Losses, dividends and asset write-downs also reduce BVPS.

Book value per share is backward-looking: it is built mostly from historical costs, less depreciation and impairments. Market value per share is simply the stock price, which reflects what investors expect the company to earn in the future. When expected profitability or growth rises, the market price tends to rise with it, while book value changes only as results are recorded.

BVPS is also linked to earnings per share (EPS). Return on equity equals net income divided by common equity, so EPS ≈ ROE × BVPS when both use the same share count and equity base. A company that earns a high return on its book equity usually justifies a higher P/B ratio, much as strong earnings growth supports a higher P/E ratio.

Historical cost. Land, buildings and equipment are carried at purchase cost less depreciation, which can be far from what they would sell for today.
Missing intangibles. Internally developed brands, software, patents and customer relationships generally do not appear on the balance sheet. Asset-light companies in technology or services can show a low BVPS while being highly valuable.
Accounting choices. Depreciation methods, impairments and goodwill from acquisitions all shape book value, which makes cross-company comparisons imperfect. Some analysts strip out goodwill and intangibles to calculate tangible book value per share.
Liquidation is theoretical. Assets sold in a forced sale often fetch less than their carrying value, so BVPS is not a guaranteed floor for the share price.
Industry fit. BVPS is most informative for asset-heavy businesses such as banks, insurers and manufacturers, where balance sheet values track economic value more closely.

FAQs

What does a negative book value per share mean?

It means liabilities exceed assets, a condition known as balance sheet insolvency. It can signal financial distress, but it also arises at profitable companies that have bought back large amounts of stock or paid big dividends, so the cause matters more than the sign.

Is BVPS relevant when a company is bought out?

It is one reference point. Acquirers typically pay based on expected earnings and cash flows, so takeover prices often differ substantially from book value.

The Bottom Line

BVPS is most useful to investors who are weighing asset-heavy businesses such as banks, insurers and manufacturers, where balance sheet values track economic value fairly closely. Compare it with the share price and track it over time to see whether common equity is growing. A low P/B ratio can also reflect weak profits or overstated assets, so treat it as a starting point for analysis rather than a guaranteed price floor.