BOOK VALUE PER SHARE

- The amount that would be paid on each share assuming the entity is liquidated and the amount available to
shareholders is exactly the amount reported as shareholders’ equity
- One class of share capital
ܶ‫ܵ ݈ܽݐ݋‬ℎܽ‫݁ݎ‬ℎ‫ ݏݎ݈݁݀݋‬ᇱ ‫ݕݐ݅ݑݍܧ‬
‫ ݁ݑ݈ܽݒ ݇݋݋ܤ‬ሺ‫ܸܤ‬ሻ‫ݏ ݎ݁݌‬ℎܽ‫= ݁ݎ‬
݊‫ݏ ݂݋ ݎܾ݁݉ݑ‬ℎܽ‫݃݊݅݀݊ܽݐݏݐݑ݋ ݏ݁ݎ‬
- Two classes of share capital
‫ ݁ݑ݈ܽݒ ݇݋݋ܤ‬ሺ‫ܸܤ‬ሻ‫ݏ ݁ܿ݊݁ݎ݂݁݁ݎ݌ ݎ݁݌‬ℎܽ‫ ݁ݎ‬ሺܲܵሻ
ܲ‫ܵ ݁ܿ݊݁ݎ݂݁݁ݎ‬ℎܽ‫݁ݎ‬ℎ‫ ݏݎ݈݁݀݋‬ᇱ ‫ݕݐ݅ݑݍܧ‬
=
݊‫ݏ ݁ܿ݊݁ݎ݂݁݁ݎ݌ ݂݋ ݎܾ݁݉ݑ‬ℎܽ‫݃݊݅݀݊ܽݐݏݐݑ݋ ݏ݁ݎ‬

‫ ݁ݑ݈ܽݒ ݇݋݋ܤ‬ሺ‫ܸܤ‬ሻ‫ݏ ݕݎܽ݊݅݀ݎ݋ ݎ݁݌‬ℎܽ‫ ݁ݎ‬ሺܱܵሻ

ܱ‫ܵ ݕݎܽ݊݅݀ݎ‬ℎܽ‫݁ݎ‬ℎ‫ ݏݎ݈݁݀݋‬ᇱ ‫ݕݐ݅ݑݍܧ‬
=
݊‫ݏ ݕݎܽ݊݅݀ݎ݋ ݂݋ ݎܾ݁݉ݑ‬ℎܽ‫݃݊݅݀݊ܽݐݏݐݑ݋ ݏ݁ݎ‬
- Computation of balance of shareholders’ equity available and outstanding shares
Shares Amount
Share capital issued (at par) XX PXX
Add: Share capital subscribed XX XX
Total XX PXX
Less: Treasury shares at par XX XX
Amount and shares outstanding XX PXX
** Subscription receivable should be deducted from subscribed share capital.
However, it is not included in excess over par.
For the purpose of BV computation, treasury shares shall be treated as retired. Any gain is credited to share
premium and any loss is charged first to share premium and then o retained earnings.

- Liquidation value – the amount which the preference shareholders normally receive upon liquidation of
the corporation. In the absence of such, the preference shareholders shall receive an amount equal to the
par or stated value
- Preference as to assets – entitled to payment not only for the liquidation value but also dividends in
arrears, fully payable, even if there is a deficit. Thus, the deficit is fully shouldered by the ordinary
shareholders.
- Preference as to dividends – the right to receive dividends first before the ordinary shareholders do when
there is a declaration. Any deficit will be shared pro-rata.
- Different kinds of Preference shares:
o Noncumulative – one on which the right to receive dividends is forfeited in any one year in which
dividends are not declared, i.e. only entitled to current year dividends
o Cumulative – one on which any undeclared dividends accumulate each year until paid, i.e.
dividends in arrears
o Nonparticipating – one that is entitled to receive dividends in excess of the basic or fixed rate
o Participating – one which is entitled to receive dividends in excess of the basic or fixed rate (fully
or partial participating)
1) Before participating, the ordinary share should receive first an amount equal to the basic
preference share rate.
- Special notes:
o General Rule – preference share “noncumulative and nonparticipating”
o Dividend in arrears usually include current dividends. Dividends in arrears in prior years (PY) shall
be specifically disclosed, otherwise, there are no arrearages.
o In cases where there are two classes of preference share with different rates and both are
participating, the lower rate shall be the basis for the allocation to the ordinary share.
Case 1: PS noncumulative & nonparticipating
Excess over par Preference Ordinary
Balances XX XX XX
Liquidation Premium, if any (XX) XX
Preference Dividend (XX) XX
Balance to common XX XX
Total SHE XX XX
Divided by shares outstanding X X
BV per share XX XX

Case 2: PS cumulative & nonparticipating

Excess over par Preference Ordinary
Balances XX XX XX
Liquidation Premium, if any (XX) XX
Preference Dividend (including PY if not yet paid) (XX) XX
Balance to common XX XX
Total SHE XX XX
Divided by shares outstanding X X
BV per share XX XX
Case 3: PS cumulative & participating
Excess over par Preference Ordinary
Balances XX XX XX
Liquidation Premium, if any (XX) XX
Preference Dividend (including PY if not yet paid) (XX) XX
Ordinary Dividend (PS %* x OS Balance)
Balance for participation XX
Preference (pro-rata, based on par value balance)**
Ordinary (pro-rata, based on par value balance)**
Total SHE XX XX
Divided by shares outstanding X X
BV per share XX XX

* The lowest rate of PS is used if there are 2 or more classes of PS.

However, if the ordinary shares have a rate of its own, that rate will used.

** If partially participating, the excess participating % over the basic % will be the basis for
the participation. In other words, if the participation is 14% with 12% PS rate, then only
an additional 2% of preference share balance will be added for book value computation.
The remaining excess over par will be given to the ordinary shares.
- Maximum Dividend
o Steps on computing for projected dividend declaration/ maximum dividend
1) Compute the expected ordinary share dividend.
2) % of ordinary dividend on the balance to know the % of preference share, if participating
‫݀݊݁݀݅ݒ݅݀ ݕݎܽ݊݅݀ݎ݋ ݀݁ݐܿ݁݌ݔܧ‬
ܱ‫ݏ ݕݎܽ݊݅݀ݎ‬ℎܽ‫ݎܽ݌ ݐܽ ݈ܽݐ݅݌ܽܿ ݁ݎ‬
3) Add #1 and expected preference dividend*.
 Includes the dividends in arrears.
 The computed participation % will include the basic or dividend for the current year.