Book value shows how much a company would be worth if it sold all its assets and paid off all its debts, using the values reported on the balance sheet. It represents the company’s net asset position according to accounting rules, not market prices.
The calculation includes assets such as cash, equipment, buildings, and inventory, minus liabilities such as loans, accounts payable, and other obligations. Because assets lose value over time, book value also reflects depreciation and amortization — which gradually reduce the recorded value of long-term assets.
Book value can change as companies invest in new assets, pay off debt, or adjust asset values due to impairment or revaluation. Investors often compare book value to market value to see whether a stock is priced above or below the company’s recorded net worth.
Book value helps investors assess financial strength, evaluate long-term stability, and understand how effectively a company manages its assets and debt. It is also used in valuation ratios such as price-to-book (P/B).
Book value is calculated by adding all assets recorded on the balance sheet and subtracting all liabilities. It reflects accounting values, which include adjustments such as depreciation, amortization, and impairment. These accounting rules make book value a conservative estimate of net worth.
Market value depends on investor expectations, demand, industry trends, and future outlook. Book value depends strictly on accounting entries. Assets like brand value, software, or intellectual property may not be fully reflected in book value, while market value often prices them in. This can lead to large differences between the two.
Investors compare the stock price to book value using the price-to-book (P/B) ratio. A low P/B ratio may suggest the stock is undervalued, while a high P/B may reflect strong growth expectations. Analysts also watch changes in book value per share to measure whether the company is growing its net worth over time.
A company has $800 million in assets and $500 million in liabilities. Its book value is $300 million. If the company has 30 million shares outstanding, the book value per share is $10.
FinFeedAPI makes book value analysis easier with two key tools:
These datasets help users understand a company’s net worth, track changes over time, and evaluate financial strength with reliable, standardized information.
