Book value
Book value is the amount an item is carried at in the accounting records: original cost less accumulated depreciation for a single asset, or total assets minus total liabilities for a whole company.
The term does two jobs. For a single asset it is the carrying amount, meaning what was paid less the depreciation charged against it since. For a whole company it is total assets minus total liabilities, which is the same figure as equity. Divide that by the number of ordinary shares in issue, after any preference shares have been stripped out, and you get book value per share; set the share price against it and you get the price-to-book ratio.
Book value moves slowly and is hard to argue with, which is why lenders and analysts of asset-heavy businesses lean on it. Banks, utilities and property companies hold things whose recorded amounts track what they could be sold for more closely than most. Even there it can drift: a loan book carried at cost keeps its recorded value while a rise in interest rates cuts what anyone would pay for it. Software and services companies are the opposite case, because their main resources are people, code and customer relationships that were charged as expenses while they were being built.
The mistake is reading it as a floor under the share price, or as what a break-up would raise. Research spending is charged as an expense as it happens rather than recorded as an asset, under international and United States rules alike, and brands built in-house are never recognised at all, so book value understates some companies heavily. It can overstate too: specialised machinery in a forced sale fetches a fraction of its carrying amount. Book value is a record of past spending on the balance sheet, not an estimate of what something is worth today.