1. What is Book Value?

Book Value represents a company's net asset value calculated as total assets minus total liabilities. It shows what shareholders would theoretically receive if a company were liquidated.

2. How Does the Calculator Work?

The calculator uses the book value formula:

Where:

• Total Assets — All resources owned by the company (cash, inventory, property, etc.)
• Total Liabilities — All debts and obligations the company owes

Explanation: The formula shows the residual value that would remain for shareholders after paying off all debts.

3. Importance of Book Value

Details: Book value is a key metric for value investors, used in financial ratios like price-to-book (P/B) ratio. It helps assess whether a stock is under or overvalued relative to its accounting value.

4. Using the Calculator

Tips: Enter total assets and total liabilities in the same currency. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between book value and market value?
A: Book value is based on accounting records, while market value reflects current stock price and investor sentiment.

Q2: Can book value be negative?
A: Yes, if liabilities exceed assets, indicating financial distress.

Q3: How often should book value be calculated?
A: Typically calculated quarterly when financial statements are released.

Q4: Does book value include intangible assets?
A: It depends on accounting standards - some intangibles may be excluded.

Q5: Why might investors prefer low price-to-book ratios?
A: It may indicate the stock is undervalued relative to its assets.