What Is Book Value?
5paisa Research Team
Last Updated: 01 Jan, 2025 10:15 AM IST

Content
- What Is Book Value?
- Understanding Book Value
- Book Value per Share (BVPS)
- Price-to-Book (P/B) Ratio
- Importance of Book Value
- Limitations of Book Value
- Book Value versus Market Value
- How to Calculate Book Value?
- Conclusion
Book value is a stock's net asset value. Many well-known investors utilise book value to evaluate a stock's fair value, which helps them make investing decisions.
Assessing the actual value of a publicly traded company can be a challenging undertaking. Book value is one such commonly used approach.

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Frequently Asked Questions
Book value is derived from the term "books" used in accounting to refer to the balance sheet of a company. Accounting was previously known as bookkeeping, so book value can be synonymous with accounting value.
The market is considered to be underpricing a stock if the P/B is below 1.0 because its accounting value is greater than its market price.
Since market value takes into account profitability, intangibles, and future growth prospects, it tends to exceed book value.