Okuzeka
Investing & the Stock Market vocabulary · Valuation & Ratios

Book value

Meaning in investing & the stock market, with examples

/ˈbʊk ˌvæljuː/nounCommon term

In investing & the stock market, book value means: The value of a company according to its balance sheet: total assets minus total liabilities. It is the shareholders' equity shown in the accounts.

In Turkish: defter değeri, özkaynak değeri

How it is used

Analysts compare book value with market value, especially for banks, insurers and holding companies. Book value per share is book value divided by the number of shares. When a stock trades below book value, some investors see it as cheap, others as a sign of problems.

Example sentences

  1. The bank trades at only 70 percent of its book value.

  2. Book value per share rose because the company kept most of its profits.

Common collocations

  • book value per share
  • below book value
  • tangible book value
  • net book value
  • price-to-book ratioA company's share price divided by its book value per share, or its market capitalization divided by its book value. It compares market value with accounting value.
  • equityOwnership in a company in the form of shares. In accounting, it also means the value left for shareholders after all debts are subtracted from the assets.
  • market capitalizationThe total market value of a company's shares, calculated by multiplying the share price by the number of shares in issue.
  • undervaluedPriced lower than its estimated real value, based on profits, assets, cash flow or growth prospects. Like 'overvalued', it is a judgement.

More terms: Valuation & Ratios

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This page explains English vocabulary for learners. It is not financial advice.