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.
1678 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.
Showing 16 terms
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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.
Equity attributable to owners of the parent
AccountingThe subtotal of consolidated equity belonging to the parent’s shareholders, before non-controlling interests are added to arrive at total equity.
In plain terms
The right denominator for book value per share, and for a return on equity whose numerator is profit attributable to owners. Mixing the two levels gives the flattering answer wherever the non-controlling share of profit is positive, and the pessimistic one where the partly owned subsidiary is losing money.
Minority buyout
Fundamental analysisThe purchase by a parent of the shares in a subsidiary held by others, where control was already held — accounted for as a transaction between owners, with the excess over the carrying amount of the non-controlling interest charged directly to equity.
In plain terms
No goodwill and nothing through profit. Earnings per share rises whenever the profit picked up beats the after-tax funding cost, which holds across a wide span of prices, and book value per share falls at any price above the carrying amount bought out — so neither movement is evidence that the price was sensible.
Minority interest
AccountingThe share of a subsidiary’s profit, and of its net assets, belonging to other shareholders.
In plain terms
The older name for what Ind AS calls a non-controlling interest. Compute per-share figures after deducting it — from profit and from equity both — or you overstate earnings and book value together.
Non-controlling interest
AccountingAlso called: NCI
The share of a subsidiary’s profit and of its net assets belonging to shareholders other than the parent — presented as a separate line in consolidated profit and separately inside consolidated equity.
In plain terms
The Ind AS name for what older accounts called minority interest, and it has two halves. Ignore the profit half and earnings per share is overstated; ignore the equity half and book value per share is.