Book value is an accounting measure taken from the balance sheet. Divide it by shares outstanding to get book value per share, which value investors compare against the market price.
Book value tends to be more meaningful for asset-heavy businesses (banks, industrials, real estate) and less useful for companies whose value sits in intangibles like software, brand, or research.
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Open Decision Lab →Frequently asked questions
What is price-to-book (P/B)?
Share price divided by book value per share. A P/B below 1 sometimes flags a value opportunity — or a struggling business the market is discounting for good reason.
Related terms
Value investing
Buying companies for less than you believe they're worth, and holding until price catches up.
Market capitalization
Share price multiplied by the number of shares outstanding.
Balance sheet
A snapshot of a company's assets, liabilities, and equity at a point in time.
P/E ratio (price-to-earnings)
Share price divided by earnings per share.
Price-to-book ratio
Share price divided by book value per share — a classic value-investing metric.
Shareholders' equity
The residual claim on a company's assets after subtracting liabilities — the book value of the business.