Book value per share is a value that common stock holders would have received if all assets of the firm were sold for its accounting value and if all liabilities were settled and residual value divided among common stock holders.
The following formula is used to calculate book value per share:
TA-TL/Number of shares of common stock outstanding
This method is criticized because it relies on historical data and does not take into account the future-expected earnings of the firm. Therefore, it does not reflect the real market value of the firm.