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Colin Powell

Investment Dictionary


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Book Value of Share

 

A book value of share is calculated dividing all company’s book value (less preferred equity) by its common share number. For example, if company’s book value is 1,000,000 USD and issued share number is 10,000, then book value of one share is 100 USD. Company’s total book value is assets less liabilities and can be found on company’s balance sheet under the name ‘book value’ or ‘shareholders equity’.

 

The book value of the share can be better guidance for investors about the value of the stock than par (face) value, but still it is not accurate measurement for the real value of the share. Value of investment can be lower if assets are not liquid or value stated on balance sheet is higher than market value. Value can also be higher if company’s property generates a high return on assets (ROA). 

 

 






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