Book Value vs Shareholder’s Equity

Book value and shareholder’s equity are both measures of a company’s worth, but they are not the same thing.

Book value is the net asset value of a company, calculated as the difference between its total assets and total liabilities. It represents the value of the company’s assets if it were to be liquidated.

Shareholder’s equity, on the other hand, is the portion of the company that is owned by its shareholders. It is calculated as the difference between the total assets and total liabilities, and includes components such as common stock, retained earnings, and capital surplus. It represents the residual interest in the assets of the company after all debts have been paid.

In summary, book value is a measure of a company’s tangible assets, while shareholder’s equity is a measure of the value that belongs to the shareholders.