Book Value
Assets minus liabilities - the accounting value of equity.
What is Book Value?
What the balance sheet says shareholders own. Useful for banks and asset-heavy businesses, close to useless for software companies whose value is intangible and unrecorded.
Book Value: a worked example
$5B assets and $3B liabilities gives $2B book value; a $6B market cap is 3x book.
More terms in Valuation & Analysis
Market Capitalization
Share price times shares outstanding - the equity value of a company.
Earnings Per Share (EPS)
Net income attributable to each share of common stock.
Price-to-Earnings (P/E) Ratio
Price per share divided by earnings per share.
Dividend Yield
Annual dividends per share divided by share price.
Payout Ratio
The share of earnings paid out as dividends.
Free Cash Flow
Operating cash flow minus capital expenditures.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
Return on Equity (ROE)
Net income divided by shareholders' equity.