How to Calculate the Book Value of a Stock
In the world of accounting and finance assets tend to have two different values: book value and market value. Market value is the value of an asset in the market--the price you can reasonably obtain for the asset if you sell it. Book value is the accounting value or the value of the asset that is on the books. In theory, book value should be the same as market value, but in actuality there are often discrepancies. One measure analysts look at to highlight discrepancies is the book value of stock.
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Instructions
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Obtain the balance sheet of the company. You can request one from your broker or the investor relations department for the company. You may also be able to download a copy from the company website.
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Scroll down to the section titled "Stockholders' Equity." Identify the values for total shareholders' equity, preferred equity and total shares outstanding. Not all companies have preferred equity.
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Subtract the value for preferred stock from the value for total shareholder's equity. Divide this difference by the number of shares outstanding. The answer is the book value per share of stock.
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Walk through an example. A firm has 100 shares outstanding, $10 worth of preferred stock and total stockholders' equity of $20. The equation for book value of stock per share is: $20 - $10 / 100 = $10 / 100 = $0.10. This is the dollar value of what each shareholder is paid if the company needs to liquidate.
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References
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