The value of an asset or company as recorded on the balance sheet, calculated as original cost minus accumulated depreciation and any impairments. For companies, it represents shareholders' equity divided by outstanding shares, showing the accounting value per share.
From the literal value recorded in accounting 'books' or ledgers. The term emerged in the 19th century with the development of systematic bookkeeping and corporate accounting. It distinguished between the recorded accounting value and the actual market value of assets or companies.
Book value is like the price tag still attached to something in your closet - it tells you what you originally paid (minus wear and tear) but not what someone would actually pay for it today! That's why investors often compare market price to book value to spot potential bargains or overpriced stocks.
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