Book Value is essentially a measure of all the company's assets minus liabilities. In other words, they are your equities portion in the financial statements.
Many times investors try to use the price-to-book metrics when deciding on whether to invest in a particular company. A quick way to look at this is through filtering of the price-to-book ratio. Anything above 1 means you are paying more for what they actually are. Surely we don't want to pay extra for something worth lesser than what they are.
But how reliable is this metric?
The truth is you probably need to take a closer look of how a company's book value is derived to help you decide on your investment purchasing decision. Depending on how you see them, they can be either a value trap or value play.
Value Trap
Imagine this scenario.
You have plenty of cash and are ready to hunt for bargain counters which has been trading at ......