What is the book value per share of stock?

If a corporation does not have preferred stock outstanding, the book value per share of stock is a corporation’s total amount of stockholders’ equity divided by the number of common shares of stock outstanding on that date.

For example, if a corporation without preferred stock has stockholders’ equity on December 31, 2007 of $12,421,000 and it has 1,000,000 shares of common stock outstanding on that date, its book value per share is $12.42.

Keep in mind that the book value per share will not be the same as the market value per share. One reason is that a corporation’s stockholders’ equity is simply the difference between the total amount of assets reported on the balance sheet and the total amount of liabilities reported. Long term assets are generally reported at original cost less accumulated depreciation and some valuable assets such as trade names might not be listed on the balance sheet.

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