what is book value per share bvps 
book value per share bvps measures the book value of a firm on a per share basis bvps is found by dividing equity available to common shareholders by the number of outstanding shares book value equals a firm s total assets minus its total liabilities investopedia madelyn goodnightmeasuring book value per share bvps the book value per share bvps metric helps investors gauge whether a stock price is undervalued by comparing it to the firm s market value per share bvps is what shareholders receive if the firm is liquidated all tangible assets are sold and all liabilities are paid b v p s total equity preferred equity total shares outstanding bvps frac text total equity text preferred equity text total shares outstanding bvps total shares outstandingtotal equity preferred equity a company s stock is considered undervalued when bvps is higher than a company s market value or current stock price if the bvps increases the stock is perceived as more valuable and the price should increase if a company s share price falls below its bvps a corporate raider could make a risk free profit by buying the company and liquidating it if book value is negative where a company s liabilities exceed its assets this is known as a balance sheet insolvency since preferred stockholders have a higher claim on assets and earnings than common shareholders preferred stock is subtracted from shareholders equity to derive the equity available to common shareholders example of bvpsassume that xyz manufacturing has a common equity balance of 10 million and 1 million shares of common stock are outstanding this means that the bvps is 10 million 1 million shares or 10 per share if xyz can generate higher profits and use those profits to buy assets or reduce liabilities the firm s common equity increases the company generates 500 000 in earnings and uses 200 000 of the profits to buy assets its common equity increases along with bvps if xyz uses 300 000 of its earnings to reduce liabilities common equity also increases another way to increase bvps is for a company to repurchase common stock from shareholders many companies use earnings to buy back shares assume xyz repurchases 200 000 shares of stock and 800 000 shares remain outstanding if common equity is 10 million bvps increases to 12 50 per share 