Book value
AccountingAlso called: Net worth, Shareholders’ equity
Total assets minus total liabilities — the accounting net worth attributable to shareholders.
In plain terms
Meaningful for banks, nearly useless for a software company.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Book value accretion
Fundamental analysisThe rise in book value per share produced by issuing new shares above the existing book value — and the fall produced by issuing below it.
In plain terms
Why the identical press release is different news at different prices. The same money funds the same loans; whether existing holders end up with more book per share or less depends entirely on what the new shareholders paid.
Book value growth
Fundamental analysisThe rate at which a bank's book value per share compounds — roughly its return on equity less whatever it pays out.
In plain terms
Over long periods the share price tracks this far more closely than it tracks any single year of earnings.
Book value per share
Fundamental analysisAlso called: BVPS
Net worth divided by the number of shares outstanding.
In plain terms
The anchor of a lender’s valuation, because its assets are financial and its return is earned on the capital base. For a business whose value sits in brands or people it says very little.
Tangible book value
AccountingBook value with goodwill and intangible assets removed.
In plain terms
The conservative floor. Goodwill is the premium paid in past acquisitions, and it goes if those disappoint.
Graded Surveillance Measure
Regulation & taxAlso called: GSM
An exchange framework applied to securities whose financials look weak against the price — net worth, net fixed assets, book value — escalating through stages of progressively tighter conditions.
In plain terms
The more severe of the two frameworks, and the one pointing at the accounts rather than at the tape. At the top stages trading falls to one session a week, so the exit stays open while its timing and its price stop being yours to choose.
Liquidation value
Fundamental analysisAlso called: Break-up value, Realisable value
What would remain for shareholders if the assets were sold off and every liability settled — assets at realisable prices, not book values.
In plain terms
A floor rather than a valuation. Useful where the assets could actually be sold; close to meaningless for a business whose value walks out of the building each evening.
P/B ratio
Fundamental analysisPrice divided by book value per share.
In plain terms
Essential for banks. Nearly meaningless for asset-light businesses whose real assets are people.
Pooling of interests
AccountingAlso called: Pooling of interests method
The method used for a common-control combination: assets and liabilities carried across at existing book values, with the difference taken to a capital reserve.
In plain terms
No goodwill arises, which is the fingerprint. A capital reserve moving instead of goodwill appearing tells you a group reshuffle happened rather than a purchase.
Price to book
Fundamental analysisAlso called: P/B
Market capitalisation divided by book value.
In plain terms
Only compares businesses whose value sits on the balance sheet, and only means something read alongside return on equity.
Value factor
Technical analysisA tilt towards stocks cheap relative to earnings, book value or cash flow.
In plain terms
Lagged for most of the 2010s, which is exactly the kind of stretch that makes people abandon a factor before it works.
Asset-light
Fundamental analysisA business model requiring little fixed capital to grow.
In plain terms
High returns on a small balance sheet, and a book value that tells you almost nothing about what the business is worth.