Book value
Also called: book value per share
The value of shareholders' equity as recorded in a company's accounts; book value per share divides it by the number of shares.
Book value is based on accounting records, mostly what assets cost minus depreciation, plus retained profits. It often leaves out valuable things such as brands, customer relationships and skilled staff, and can overstate assets that have lost value.
The market can value a company far above its book value, for example a software company, or below it, for example a struggling manufacturer.
Learn more in these lessons
- Assets, liabilities and equityWhat are assets, liabilities and equity?
- Depreciation, amortisation and capital expenditureWhat are depreciation and amortisation?
- The P/B ratioWhat does the price-to-book ratio tell you, and when should you use it?
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