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Definition of Book Value

Book value is the value of a company based on its balance sheet account balance. Book value only considers the cost to liquidate a company's fixed assets and securities; it doesn't consider intangible assets, like patents, IP, brand value, and goodwill. It also doesn't account for workers' skills and human capital, or how a company's assets will generate profits and growth over time. Thus, book value is typically lower than a company's "market value" which will take into consideration the foregoing things.