Book Value
The accounting value of a company's equity, equal to total assets less total liabilities.
Formula
Book Value = Total Assets - Total Liabilities; Tangible Book Value = Book Value - Goodwill - Intangible Assets
Unit
₹ crore
In depth
Book value records what was paid for things, less depreciation, which makes it a reliable measure for banks and financial companies whose assets are financial and marked close to fair value, and a poor one for asset-light businesses whose value is in brands and people. A software company trading at eight times book is not necessarily expensive, and a steel company at 0.6 times book is not necessarily cheap. Buybacks above book value reduce book value per share, and large accumulated losses can push it negative. Comparing price to book across industries is one of the most common misuses of a valuation ratio.
Worked example
Assets ₹1,200 crore less liabilities ₹750 crore gives book value ₹450 crore. Deducting ₹300 crore of goodwill leaves tangible book value of ₹150 crore, which is the figure a lender would work from.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Book Value” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.