Book Value
Book value is the net asset value of a company as recorded on its balance sheet — total assets minus total liabilities. Per share book value is obtained by dividing by shares outstanding. It represents the accounting value of equity and is a reference point in stock valuation.
Formula
Example
A company with $5B in assets and $3B in liabilities has a book value of $2B. With 100M shares outstanding, book value per share is $20. If the stock trades at $60, the P/B ratio is 3x — reflecting the premium the market assigns above accounting values in stock valuation.
Why It Matters
Book value anchors Graham-style stock valuation and is essential for valuing asset-heavy businesses. The difference between intrinsic value and book value reveals how much of a company's worth comes from intangible competitive advantages rather than hard assets.
How MiniValuator Uses Book Value
For banks, book value per share is where valuation starts: the engine anchors on tangible book value rather than projected cash flow, because that is where the worth sits. For insurers and other asset-heavy businesses it is important balance-sheet context; for asset-light businesses it stays a reference point.
See It in Action
- How the PE model estimates fair value
- Technology sector fair value analysis
- Healthcare sector fair value analysis
Related Terms
- Price-to-Book Ratio (P/B) — The Price-to-Book (P/B) ratio compares a stock's market price to its book value per share (assets mi...
- Intrinsic Value — Intrinsic value is the estimated true worth of an asset based on its fundamental economic characteri...
- Enterprise Value (EV) — Enterprise Value (EV) represents the total value of a company to all capital providers (equity holde...
- P/E Ratio (Price-to-Earnings) — The Price-to-Earnings (P/E) ratio is a relative valuation metric that compares a company's current s...
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