Shareholders' equity on the balance sheet — total assets minus total liabilities — representing the accounting net worth of a company.
Deeper Explanation
Book value is an accounting figure, not a market value. It reflects the historical cost of assets minus accumulated depreciation. For asset-heavy businesses (banks, manufacturers, utilities), book value is a meaningful proxy for economic value. For asset-light businesses (technology, consumer brands), book value understates economic value because intangible assets — brands, patents, networks, human capital — are not fully captured. Growing book value per share over time is one way Buffett tracks wealth creation at Berkshire, though he now prefers intrinsic value as the more meaningful measure.
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