What does Book Value mean?
A company that’s listed on a stock exchange has two values, a Book Value and Market Value.
Book Value means the value of a company according to its books (accounts).
To work out what a company’s book value is, it’s the difference between a company’s total assets and total liabilities. So the book value shows how much a company is worth if all its assets are sold and all its liabilities are paid back.
Primarily a company’s Book Value is used to show two things:
The amount that creditors and investors could receive back if the company is liquidated.
If a company’s stock is trading above or below the company’s book value in terms of the price.
Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.
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