# What is the book value?

Computes the book value of a company (assets minus liabilities, less preferred equity) and per share, or the book value of an asset (cost minus accumulated depreciation).

- Page: https://www.acalculator.org/finance/book-value-calculator
- JSON spec: https://www.acalculator.org/finance/book-value-calculator.json
- Version: 073088b60788

## Default answer

Example with the default inputs (Book value of A company, Total assets $250,000.00, Total liabilities $150,000.00, Preferred equity $20,000.00, Common shares outstanding 8,000): The book value is $80,000.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| of | Book value of | A company, from its balance sheet, or one asset, from its cost and depreciation. |
| ta | Total assets | Everything the company owns, from the balance sheet. |
| tl | Total liabilities | Everything the company owes, current and long-term. |
| pe | Preferred equity | The part of equity that belongs to preferred stockholders, taken off for common stockholders. Optional. |
| sh | Common shares outstanding | Shares of common stock held by investors, for the book value per share. Optional. |
| cost | Original cost | What the asset cost, including shipping and setup to get it ready for use. |
| ad | Accumulated depreciation | All the depreciation charged on the asset so far. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| book | Book value | For a company, total assets − total liabilities − preferred equity (the common stockholders’ equity). For an asset, original cost − accumulated depreciation. |
| perShare | Book value per share | Book value ÷ common shares outstanding. Shown when you enter the shares. |
| equity | Total equity | Total assets − total liabilities, before preferred equity is taken off. |

## Method

Company: total equity = total assets − total liabilities; book value = total equity − preferred equity; book value per share = book value ÷ common shares outstanding. Asset: book value = original cost − accumulated depreciation.

## Assumptions

- Balance sheet amounts are book (historical cost) values from one date, not market values.
- Preferred equity is the amount that belongs to preferred stockholders on that date.
- Arithmetic is exact on the typed decimals; money shows to the cent, halves up.

## Worked examples

1. of = company, ta = $250,000.00, tl = $150,000.00, pe = $20,000.00, sh = 8,000 gives book = $80,000.00, perShare = $10.00, equity = $100,000.00. Source: OpenStax, Principles of Finance, 6.5 Market Value Ratios (book value per share = (total equity − preferred equity) ÷ total shares outstanding; Clear Lake Sporting Goods). https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios: (100,000 − 20,000) ÷ 8,000 = $10.
2. of = asset, cost = $58,000.00, ad = $9,600.00 gives book = $48,400.00. Source: OpenStax, Principles of Financial Accounting, 11.3 Explain and Apply Depreciation Methods to Allocate Capitalized Costs (book value = original cost − accumulated depreciation; Kenzie Company printing press). https://openstax.org/books/principles-financial-accounting/pages/11-3-explain-and-apply-depreciation-methods-to-allocate-capitalized-costs: 58,000 − 9,600 = 48,400.
3. of = asset, cost = $58,000.00, ad = $19,200.00 gives book = $38,800.00. Source: OpenStax, Principles of Financial Accounting, 11.3 Explain and Apply Depreciation Methods to Allocate Capitalized Costs (book value = original cost − accumulated depreciation; Kenzie Company printing press). https://openstax.org/books/principles-financial-accounting/pages/11-3-explain-and-apply-depreciation-methods-to-allocate-capitalized-costs: 58,000 − 19,200 = 38,800.
4. of = company, ta = $1,500,000.00, tl = $500,000.00, sh = 30,000 gives book = $1,000,000.00, perShare = $33.33, equity = $1,000,000.00. Source: OpenStax, Principles of Finance, 6.5 Market Value Ratios (book value per share = (total equity − preferred equity) ÷ total shares outstanding; Clear Lake Sporting Goods). https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios.

## FAQ

### What is book value?

Book value is what something is worth on the company's books. For a company, it is total assets minus total liabilities: the equity on the balance sheet. For one asset, it is the original cost minus the depreciation charged so far.

### How do I calculate book value per share?

Take total equity, subtract preferred equity, and divide by the common shares outstanding. Clear Lake Sporting Goods had $100,000 of equity, $20,000 of it preferred, and 8,000 shares, so its book value per share was (100,000 − 20,000) ÷ 8,000 = $10.

### How do I calculate the book value of an asset?

Subtract the accumulated depreciation from the asset's original cost. Kenzie Company's printing press cost $58,000; after one year of $9,600 depreciation, its book value was $48,400, and after two years $38,800.

### What does it mean if the share price is above book value?

OpenStax reads a share price above book value per share as a sign the stock may be overvalued, and a price below it as undervalued. The balance sheet leaves out things such as brands and future earnings, so compare the two with similar companies before drawing a conclusion.

### Why subtract preferred equity?

Preferred stockholders are paid before common stockholders if the company is wound up. Book value per share is about common shares, so the part of equity that belongs to preferred stock comes off first. Leave the box empty if there is no preferred stock.

### Is book value the same as market value?

No. Book value comes from the balance sheet, mostly at historical cost less depreciation. Market value is what buyers would pay today. A building's book value can be far below its market value after years of depreciation.

## Sources

- OpenStax, Principles of Finance, 6.5 Market Value Ratios: book value shows the value of the firm on paper; book value per share = (total equity − preferred equity) ÷ total shares outstanding; Clear Lake Sporting Goods (100,000 − 20,000) ÷ 8,000 = $10. https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios (retrieved 2026-10-19)
- OpenStax, Principles of Financial Accounting, 11.3 Explain and Apply Depreciation Methods to Allocate Capitalized Costs: book value is the asset’s original cost less accumulated depreciation; Kenzie Company printing press (cost $58,000; book value $48,400 after one year and $38,800 after two). https://openstax.org/books/principles-financial-accounting/pages/11-3-explain-and-apply-depreciation-methods-to-allocate-capitalized-costs (retrieved 2026-10-19)
- U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements: assets = liabilities + shareholders' equity. https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements (retrieved 2026-10-19)