Glossary · from the DESK dictionary
Book Value
A company's accounting equity value (assets minus liabilities).
In plain words
What would theoretically be left over if a company sold all its assets and paid off all its debts.
In more detail
Book value is the equity shown on the balance sheet. Its informativeness depends entirely on how the assets are measured: land carried at historical cost is regularly far understated while capitalised goodwill from overpriced acquisitions can be overstated. Book value is therefore a starting point rather than a conclusion.
Example
A company reports 2 billion euros of book value including 1.1 billion of goodwill and land at 40 million historical cost against a 380 million market value. The adjusted figure is entirely different.
What it means for traders
The basis for the price-to-book ratio, important for value-investing approaches.
Common pitfalls
Often not very informative about actual enterprise value for asset-light companies (e.g. software).
Related terms
Accumulated Depreciation · Balance Sheet · Book Value Per Share (BVPS) · Historical Cost Accounting · Price-to-Book Ratio (P/B) · Tangible Net Worth
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.