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Updated 1mo ago.
Updated 1mo ago.
Net asset value of the company per its books (total assets − total liabilities), divided by share count to get book value per share. Underlies the price-to-book (P/B) ratio. Poorly reflects the value of intangible-rich companies (brands, R&D, software) that aren't booked.
A company owns $3B in assets and owes $2B in debt. Its book value is $1B ($3 − $2). With 100M shares, book value per share is $10.
Book value is the company's "on-the-books" value and underlies the P/B ratio. It poorly reflects intangible-rich firms (brands, R&D, software) not recorded on the balance sheet: Apple is worth far more than its book value.