Definition
Book value equals total assets minus total liabilities, representing the accounting value of shareholders' equity. Book value per share helps assess whether a stock is over or undervalued relative to its net assets. It's most relevant for asset-heavy industries.
Formula
Book Value = Total Assets - Total Liabilities | BVPS = Book Value / Shares Outstanding
Example
With $500M assets, $300M liabilities, and 20M shares, book value per share is $10. If the stock trades at $15, it's at 1.5x book value.
FAQ
What is Book Value?
The net asset value of a company based on its balance sheet.
How do you calculate Book Value?
A common formula for Book Value is: Book Value = Total Assets - Total Liabilities | BVPS = Book Value / Shares Outstanding
Why is Book Value important?
Book Value helps investors evaluate fundamental analysis and make more informed decisions.