When people talk about the book value for a company, what do they mean? It’s a term that usually comes up when discussing when trying to figure out the true worth of the company. It’s particularly used in the context of pinning a fair value on insurance companies and bank stocks.
The reason why I rarely use it in my own writings is my because it is a technique that measures “the accounting value” of a company rather than the intrinsic value of the company. Book value attempts to measure the liquidated value of a company if you add up all the assets and subtract all the liabilities.
That is a very interesting thing to know. If a stock sells for $25, and you believe that the firm could be chopped up into parts and then sold so that you would receive $50 per share in cash at the end … Read the rest of this article!