1. What is Book Value?

Book Value represents the net value of a company's assets that shareholders would theoretically receive if the company were liquidated. It's calculated by subtracting total liabilities from total assets.

2. How to Calculate Book Value

The formula for calculating book value is:

Where:

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

Explanation: Book value shows what would remain if a company paid off all its liabilities using its assets.

3. Importance of Book Value

Details: Book value is a key metric used in fundamental analysis to assess a company's valuation. Investors compare it to market value to determine if a stock is overvalued or undervalued.

4. Using the Calculator

Tips: Enter total assets and total liabilities in dollars. Both values must be positive numbers. The calculator will automatically compute the book value.

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 is what investors are willing to pay for the company.

Q2: What does a negative book value mean?
A: Negative book value means liabilities exceed assets, which could indicate financial distress.

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

Q4: Does book value include intangible assets?
A: It depends on accounting standards. Some intangibles like goodwill are included, while others may not be.

Q5: What's book value per share?
A: Book value per share is calculated by dividing total book value by the number of outstanding shares.