Net Value Per Share (NVPS)

Net Value Per Share (NVPS), often referred to as Net Asset Value (NAV) per share or Book Value per Share (BVPS), is a measure of the value of a company's equity on a per-share basis. It shows how much each share would be worth if the company were liquidated and all liabilities were paid off.

Formula:

$$\text{Net Value Per Share} = \frac{\text{Total Shareholders' Equity} - \text{Preferred Equity}}{\text{Total Outstanding Common Shares}}$$

Where:

• Shareholders' Equity = Total Assets – Total Liabilities

• Preferred Equity = Value of any preferred shares (subtracted because this value doesn't belong to common shareholders)

• Outstanding Shares = Number of common shares currently held by shareholders

Example:

If a company has:

• Total assets = $10 million

• Total liabilities = $6 million

• Preferred equity = $1 million

• Outstanding common shares = 1 million

$$\text{NVPS} = \frac{(10 - 6 - 1)}{1} = \frac{3}{1} = \$3.00$$

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When buying shares, if this Net Value is higher than the share price, it is advisable to buy shares.