Book value refers to the value of a company's assets as recorded on its balance sheet, minus its liabilities. It represents the net worth of a company from an accounting perspective and is calculated by subtracting total liabilities from total assets. This figure can provide insight into a company's financial health and is often used by investors to assess whether a stock is undervalued or overvalued. In the context of individual assets, the book value can also refer to the original cost of an asset, adjusted for depreciation or amortization. For example, the book value of a piece of equipment would be its purchase price minus any accumulated depreciation. This concept is important for understanding the true value of assets over time.