Book Value
Total assets minus total liabilities on the balance sheet — what shareholders would theoretically receive if the company were liquidated today.
Formula
Book Value Per Share = (Total Assets − Total Liabilities) ÷ Shares Outstanding
Book value (or shareholders' equity) is the accounting net worth of a company: total assets minus total liabilities. On a per-share basis, it is book value divided by shares outstanding.
The price-to-book (P/B) ratio compares market price to book value. A P/B of 1× means you pay exactly what the balance sheet says it's worth; above 1× reflects goodwill, brand value, and growth expectations; below 1× can signal distress or that the market doubts the asset values.
Book value is most meaningful for financial companies (banks, insurance) where assets are mostly financial instruments. For tech and brand-heavy companies, intangible assets mean book value drastically understates economic worth.
Related Terms
Enterprise Value (EV)
The total cost to acquire a business outright: market cap plus net debt. The true takeover price, capital-structure-neutral.
IntermediateEPS (Earnings Per Share)
Net income divided by shares outstanding. EPS is the single most-watched earnings metric for valuing a stock.
BeginnerFree Cash Flow
Operating cash flow minus capital expenditures. The actual cash a business generates after maintaining and growing its assets.
IntermediateP/E Ratio
Share price divided by earnings per share. The P/E tells you how many dollars investors pay for each dollar of earnings.
BeginnerPrice-to-Book (P/B) Ratio
Share price divided by book value per share. Shows how much you pay per dollar of accounting net worth.
IntermediateReturn on Equity (ROE)
Net income as a percentage of shareholders' equity. Measures how efficiently a company turns shareholder capital into profit.
IntermediateRevenue
The total income a company generates from its business activities before any costs are deducted. The "top line" of the income statement.
BeginnerShare Buyback
When a company uses its cash to purchase its own shares on the open market, reducing shares outstanding and boosting EPS.
Intermediate