Book value

Book value is the net asset value (NAV) of a company's stocks and bonds.

Finding the NAV involves subtracting the company's short- and long-term liabilities from its assets to find net assets. Then you'd divide the net assets by the number of shares of common stock, preferred stock, or bonds to get the NAV per share or per bond.

Book value is sometimes cited as a way of determining whether a company's assets cover its outstanding obligations and equity issues.

Further, some investors and analysts look at the price of a stock in relation to its book value, which is provided in the company's annual report, to help identify undervalued stocks. Other investors discount the relevance of this information.