In this article, I take a closer look at the book value of the company and why you should consider it when picking your investments. The book value, also called net book value, or net asset value, is the total value of the company’s assets that the shareholders would theoretically receive if a company were to be liquidated. In other words, the net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
The Book Value
So, the book value is a pretty important factor when considering and evaluating companies, and for this reason, I use it extensively when I publish my dividend stock analysis of a company. It is so important in fact, that it forms the basis of the Graham Number (more on this below), which is a calculation of the fair value of a company as per Benjamin Graham – the father of value investing.