Face Value
When a company is listed in the stock market, the company's management determines the value of the company's share, called as Face Value. Face value obtained by dividing the share capital with the total number of outstanding shares. The face values always remains constant, unless company announces the stock split.
Formula:
Face value = Total equity share capital / Total number of outstanding shares.
Calculating Face Value:
"ABC" comapany has equity share capital of 10lakh rupees and one lakh outstanding shares, then the face value of the ABC share will be 10rs. Most of the companies had their face values as 10rs, when they issued an IPO.
Book Value
A company has liquidates its assets and settled the liabilities and still it left with some money. The value of the left over money is the Book value of the company. We can get the details of assets and liabilities from the balance sheet of the company. So we can call it as the value of the company according to the Books.
Formula:
Book Value = Total Assets - Total Liabilities
But, some investors do not consider intangible assets(don't have physical form like brand value, goodwill, patents..) while calculating the book value. Then
Book Value = (Total Assets-Intangible Assets) - Total Liabilities
Calculating Book Value:
"ABC" Company has 10Crores of assets after excluding the intangible assets and 4Crores of liabilities, then the book value will be 6Crores.
Book value is used to determine BVPS(Book value per share) and P/B ratio(Price to Book ratio) out of which P/B ratio is famous metric used to determine the valuation of price of any stock.
Book values per share(BVPS):
The total book value of company is divided with the total number of outstanding shares.
Example:
ABC company assets = 10cr
ABC company liabilities = 6cr
Total outstanding shares = 100000, for the given values BVPS calculated as..
BVPS =10cr - 6cr/100000
=400rs