Investing For Beginners: What is Book Value


If your company is going bankrupt, the first thing you would want to know is what is the book value.

Book value is the total tangible assets minus total liabilities, ie, the value of the company if it stopped all its operations and all the assets are liquidated and the debts paid.

Book value has an important role to play in the teachings of Benjamin Graham, the mentor of Warren Buffett and father of value investing. But today, it has lost its importance because we are living in an age of capitalism without capital. Some companies have brand values which exceeds their book value. Book value also doesn't take into consideration trademarks and patents.

The easiest way to look at Book value is to consider the book value per share and also the price per book.

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