The Book Value is a company’s total assets less its liabilities. The stock holders Equity in a company or a company’s net assets.
The book value of a company is the total value of the company’s assets, minus the company’s outstanding liabilities. The book value of a company is calculated by estimating the total amount a company is worth if all the assets are sold and the liabilities are paid back.
Advantage of using book value as a basis for a company’s valuation is that there’s little or no subjectivity involved in calculating the figure.When you buy an asset, its cost becomes the starting entry on the balance sheet for the value of that asset.Over time, the asset gets used up, and depreciation gradually reduces the balance-sheet value of the asset.