1. What is the Price Per Share Formula?

The Price Per Share formula calculates the value of each individual share based on the company's book value and total number of outstanding shares. It's a fundamental accounting metric used in financial analysis.

2. How Does the Calculator Work?

The calculator uses the Price Per Share formula:

Where:

• Book Value — Total equity value of the company (currency)
• Shares — Total number of outstanding shares (number)

Explanation: The formula divides the company's total book value by the number of shares to determine the theoretical value per share.

3. Importance of Price Per Share Calculation

Details: This calculation helps investors assess whether a stock is undervalued or overvalued compared to its market price, and is used in various financial analyses and valuations.

4. Using the Calculator

Tips: Enter the company's total book value in currency and the total number of outstanding shares. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is book value different from market value?
A: Book value is based on accounting records (assets minus liabilities), while market value is determined by stock market prices.

Q2: What's a good price per share ratio?
A: Generally, a lower price per share relative to market price may indicate undervaluation, but this varies by industry.

Q3: Does this include preferred shares?
A: Typically, this calculation uses common shares outstanding. For complete analysis, preferred shares should be considered separately.

Q4: How often should this be calculated?
A: It should be recalculated whenever there are significant changes in book value or share count (e.g., after financial reports or share issuances).

Q5: Can this be used for all companies?
A: While applicable to most companies, service firms with few tangible assets may have limited usefulness for this metric.