Book Value Per Share Presentation

8/11/2019 Book Value Per Share Presentation

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BOOK VALUE PER SHARE


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DIFFERENCE BETWEEN BOOK

VALUE AND MARKET VALUE

Book Valueliterally means the value of the business

according to its "books" or financial statements. In this case,

book value is calculated from the balance sheet, and it is the

difference between a company's total assets and totalliabilities. Note that this is also the term for shareholders'

equity. For example, if Company XYZ has total assets of

$100 million and total liabilities of $80 million, the book

value of the company is $20 million. In a very broad sense,this means that if the company sold off its assets and paid

down its liabilities, the equity value or net worth of the

business, would be $20 million.


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Market ValueIs the value of a company according to the

stock market. Market value is calculated bymultiplying a company's shares

outstanding by its current market price. If

Company XYZ has 1 million sharesoutstanding and each share trades for $50,

then the company's market value is $50

million. Market value is most often thenumber analysts, newspapers and investors

refer to when they mention the value of the

business


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The book value of a company divided by the

number of shares outstanding

The ratio of stockholder equity to

the average number of Common

shares. Book value per share should not be

thought of as an indicator of economic worth,since it reflects accounting valuation (and not

necessarily market valuation).


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The book value per share formula is

used to calculate the per share valueof a company based on its equity

available to common shareholders.


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Book Value Per share

Total Shareholder Equity-Preferred Equity

Total Outstanding share


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EXAMPLE

Company XYZ reports total assets of$17 million and total liabilities of $7

million for a total book value of 10

million. The company has

2,000,000 shares outstanding. Thus,

the book value per share is $5.00 (10million / 2 million = 5.00).


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ARSALANUL-ISLAM

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Definition of 'Stock Option

A privilege, sold by one party to

another, that gives the buyer the

right, but not the obligation, to

buy (call) or sell (put) a stock at

an agreed-upon price within acertain period or on a specific

date.


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Definition of 'Stock Option

"Stock options are contracts; they

don't represent ownership in

anything. They are merely contracts

that grant you certain rights".

Stock options" are often calledderivatives because they are derived

from stock prices.


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If you buy or own a stock option

contract it gives you the "right", butnot the "obligation", to buy or sell

shares of a stock at a "set price" on

or before a given "date" (timeperiod). After this date, your contract

expires and your option ceases to

exist.


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MUHAMMAD HAROON

AMEER

1262


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2 Types of Stock Options

Puts and Calls

The "Put" option gives its buyer the

right, but not the obligation, to "sell"

shares of a stock at a specified price

on or before a given date.


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The "Call" option gives its buyerthe right, but not the obligation,

to "buy" shares of a stock at a

specified price on or before a

given date.


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SHEHZAD AHMED

1278


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'Stock Appreciation Right'

'SAR'


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'Stock Appreciation Right'

A right, usually granted to an employee, toreceive a bonus equal to the appreciation in

the company's stock over a specified period.

Like employee stock options, SARs benefit

the holder with an increase in stock price; the

difference is that the employee is not

required to pay the exercise price (as with an

employee stock option), but rather justreceives the amount of the increase in cash or

stock.


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Example

For example, say an employee is

given 100 SARs. Good fortuneshines and the stock increases $50

per share over three years. As aresult, the employee gets $5,000

(100 SARs x $50 = $5,000). The

main benefit with SARs is that theemployee does not have to purchase

anything to receive the proceeds.

Book Value Per Share Presentation

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