Book Value

A company's common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets such as goodwill.  This is how much the company would have left over in assets if it went out of business immediately.  Since companies are usually expected to grow and generate more profits in the future, most companies end up being worth far more in the marketplace than their book value would suggest.  For this reason, book value is of more interest to value investors than growth investors.  The value of an asset as it appears on a balance sheet, equal to cost minus accumulated depreciation.  Book value often differs substantially from market price, especially in knowledge industries such as high-tech.

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