Book Value
Short definition
Book value is equity recorded on the balance sheet (or a line’s carrying amount). It is not market or DCF value; inflation, intangibles and accounting policy pull book away from price.
Detailed explanation
P/B puts book in the denominator. High inflation shrinks historical-cost book; revaluation and IFRS policy break comps. In a statutory exit-price debate, book sits beside DCF and comps — it is not fair value on its own.
Invested capital can be built differently from book equity plus net debt (cash, associates). Write the bridge line by line.
Why it matters for the CFO
Covenant net-worth floors, collateral and P/B rest on this number. Treating book as EV systematically understates a profitable brand-heavy business.
How it is calculated
Özkaynak defter değeri = Varlıklar − Yükümlülükler (muhasebe özkaynağı)
Variables in the formula
- BV: Equity book value
How to read it
Book 400 mn TL, equity market/DCF 900 mn TL → P/B 2.25x. Trading below book is not automatically cheap; it can be returns or an accounting gap. There is no universal fair P/B.
Numerical example
Equity book 400 mn TL, equity market value 900 mn TL → P/B = 2.25x.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.