Finance Dictionary
Book Value
Definition
The value of a security or asset as entered in a company’s books.
Deep Dive
Book value, also known as shareholders' equity, represents the total value of a company's assets minus its total liabilities, as recorded on its balance sheet. In simpler terms, it's the theoretical amount of money that shareholders would receive if the company were to liquidate all its assets, pay off all its debts, and distribute the remaining cash. For individual shares, book value per share is calculated by dividing total shareholder equity by the number of outstanding shares.
Examples & Use Cases
- 1A manufacturing company's balance sheet shows $500 million in assets and $200 million in liabilities, giving it a book value of $300 million
- 2An investor comparing the book value per share of a bank against its current stock price to identify potential value investments
- 3A technology startup with significant intellectual property but minimal tangible assets might have a low book value despite a high market capitalization.
Related Terms
Market ValueBalance SheetEquityPrice-to-Book Ratio