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What is book value per share?

Investors are always looking to buy stocks at the best price. This is to maximise the potential profit if they succeed.

To do this, they rely on financial ratios. A commonly used ratio is the PB ratio. This ratio values the stock with its book value per share.

This raises the question, what is book value per share?

Well, as the name suggests, it's the book value of a company divided by the number of shares of that that company.

So if a company has Rs 50 cr book value and 2 cr shares outstanding then the book value pr share will be Rs 25.

Book value per share especially important to value investors. They attempt to pick stocks trading below the book value per share as they consider these stocks to be undervalued.

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