The book value of a company represents its net asset value, calculated by subtracting total liabilities from total assets. This value provides shareholders with an idea of what they would receive if the company were to be liquidated. To calculate the book value, you can use the following formula: Book Value Formula Book Value = Total Assets - Total Liabilities Alternatively, book value can also be calculated as the total shareholders' equity of the company. Book Value Per Share (BVPS) Formula BVPS = (Total Common Shareholders' Equity - Preferred Stock) / Number of Outstanding Common Shares The book value is important for investors as it helps them determine whether a company's stock price is overvalued or undervalued compared to its market value. A lower book value may indicate that the stock is overpriced, while a higher book value may suggest that the stock is underpriced. For example, if a company has total assets of ₹10 lakhs and total liabilities of ₹6 lakhs, its book value would be ₹4 lakhs. If the company has 10,000 outstanding shares, its BVPS would be ₹40.