What Is a Company's Net Worth Called?
A company's net worth is known as its book value. Book value represents the total assets minus total liabilities on the balance sheet. It reflects the accounting value of shareholders' equity.
Why Book Value Matters
Book value is a key metric for evaluating a company's financial health. It helps investors compare a company's market price to its accounting value. A lower market price than book value can signal potential undervaluation.
Book Value vs Market Value
While market value reflects current stock price and investor sentiment, book value is based on historical cost. Understanding both helps assess whether a stock is fairly priced. For more details on equity valuation, see Investopedia's explanation of book value.
