The book value per share is calculated by dividing the equity by the number of outstanding shares. Preferred shares are usually not included in the calculation. 

A share’s book value is often compared to its current price to determine whether it is under- or overvalued. If the book value is higher than the market value, this may indicate that the share is currently cheaply valued. If the book value is lower than the market value, this may indicate that the share is currently being traded at a fairly high price. Nevertheless, it is always useful to take other ratios into account to get an overall picture of a share’s valuation.