Book Value Per Share BVPS Formula + Calculator

High-interest rates can lead to a rise in debt financing costs, which leads to higher liabilities. In addition, changes in the management hierarchy can influence the BVPS if they impact the company’s direction or efficiency. So, one must consider other related factors before deciding about the acquisition. Alternatively, another method to increase the BVPS is via share repurchases (i.e. buybacks) from existing shareholders. The platform works exceptionally well for small businesses that are just getting started and have to figure out many things.

  1. In this case, the stock seems to trade at a multiple that is roughly in line with its peers.
  2. If the BVPS is less than the price of the stock, then that tells an investor that the stock could be overvalued—it costs more than the assets it’s entitled to.
  3. At the time Walmart’s 10-K for 2012 came out, the stock was trading in the $61 range, so the P/BVPS multiple at that time was around 2.9 times.
  4. The higher the liabilities, the lower the common equity, and thus, the lower the book value per share.
  5. Stock repurchases occur at current stock prices, which can result in a significant reduction in a company’s book value per common share.

Formula for BVPS

Besides stock repurchases, a company can also increase BVPS by taking steps to increase the asset balance and reduce liabilities. If XYZ can generate higher profits and use those profits to buy more assets or reduce liabilities, the firm’s common equity increases. If, for example, the company generates $500,000 in earnings and uses $200,000 of the profits to buy assets, common equity increases along with BVPS.

Understanding XRP’s Role in the Future of Money Transfers

For any of these investments, the NAV is calculated by dividing the total value of all the fund’s securities by the total number of outstanding fund shares. Total annual return is considered by a number of analysts to create and send an online invoice for free be a better, more accurate gauge of a mutual fund’s performance, but the NAV is still used as a handy interim evaluation tool. The market value depends on the current market price and how many outstanding shares exist.

Book Value: Definition, Meaning, Formula, and Examples

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