Book Value

Book value represents the net worth of a company based on its financial statements, specifically the value of its total assets minus its total liabilities. It reflects what a company would be worth if it were liquidated today.

Formula: Book Value = Total Assets − Total Liabilities

Why Book Value Matters:

• Used to evaluate whether a stock is overvalued or undervalued.
• Book Value Per Share (BVPS) helps compare a company's intrinsic value to its market price.
• Often used in value investing, where investors seek stocks trading below their book value.

While book value provides a solid financial baseline, it doesn’t always reflect a company’s true market worth, as intangible assets like brand reputation, intellectual property, and growth potential are not fully accounted for.