Hi I was reading about book value of a company and the book value per share and couldn't figure out the difference between book value per share and earning per share.

Are the two even related?

  • $\begingroup$ This is not directly related to quant finance and definitely too basic for this site to be on-topic, see the help center. Also, please pay attention to typos next time. $\endgroup$ – SRKX Dec 31 '15 at 5:09

The two are not comparable. Book value per share is the shareholder's equity divided by the number of commons shares. You can think of it as what would be left were the company to liquidate, after all debts have been paid. Earnings per share is the net income that goes to common shareholders.

The former is a state, the latter is a flow.

Note that earnings per share contributes to book value.

  • $\begingroup$ You can think of book value as the initial capital put into the business at startup plus the summation of subsequent earnings minus the summation of subsequent dividends. This is sometimes called the clean surplus equation. $\endgroup$ – noob2 Dec 31 '15 at 13:56

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