Book value is the difference between a company’s assets and its liabilities. It represents what shareholders would receive if the company was liquidated.
What is book value?
It’s slightly different from the market value, which is what people are willing to pay for an investment. Market value emphasizes market capitalization, or the total number of shares multiplied by its share price. Typically, the book value will be lower than the market value because it doesn’t consider future growth prospects or profitability.
Price-to-book ratio is used to compare the book value against the market value, and helps investors determine a stock’s value. Book value per share (BVPS) is a company’s total assets minus it total liabilities, divided by the number of outstanding shares.