The percentage of equity accessible to common shareholders divided by the number of existing shares is known as Book Value Per Share (BVPS). This statistic shows the minimum value of a company's equity and gauges a company's book value per share. A high BVPS indicates that the market values a company's assets at more than its liabilities, while a low BVPS suggests that investors believe the opposite.A number of factors can affect a company's BVPS, including its level of debt, depreciation expenses, and profits or losses. Generally speaking, companies with more debt tend to have lower BVPS values because their liabilities are larger in comparison to their assets. Companies with significant depreciation expenses also often have lower BVPS values because these costs reduce net income and shareholder equity on the balance sheet. Conversely, profitable companies typically have higher BVPS values because they generate more cash flow and asset valuations increase over time.Investors use book value per share as one metric when assessing a potential investment in order to get an idea of how much downside risk there is if things go wrong. A high BVPS usually means that investors are confident in management and believe that current prices do not reflect all future earnings potential; this could lead to positive stock price appreciation down the road if expectations are met or exceeded.
