BOOK VALUE

Benjamin Graham and David Dodd implied to pick stocks with share prices that are way below the company's value to obtain a margin of safety so as not to lose the investment.  

The book value of the company is calculated by dividing the net asset with the weighted number of shares.  The net asset value = Total assets – Total liabilities.

Total assets, total liabilities and the weighted number of shares can be found in the company’s annual report.  The annual report is filed in the U.S. Securities and Exchange Commission as 10-K for U.S. companies or 20-F for non-U.S. companies. The company filings can be searched in https://www.sec.gov/edgar/searchedgar/companysearch.html by searching the company ticker symbol.

For example, using 20-F of ticker symbol GSM for Ferroglobe PLC and subsidiaries, the book value for year 2020 is calculated as follows:

In the “Consolidated Statement of Financial Position”,   

Total assets = $ 1347145 K

Non-current liabilities = $ 548640 K

Current liabilities = $ 432786 K

Total liabilities = Non-current liabilities + current liabilities = $ 548640 K + $ 432786 K = $ 981426 K

In the “Consolidate Income Statement”

The weighted average basic/diluted shares outstanding = 169269281

Therefore the book value = ($ 1347145 K - $ 981426 K) ÷ 169269281 = $2.16 per share

On April 14, 2020, GSM share price = $ 0.471 per share and it is below the book value by 459%.  The discount of 459% to book value is assumed as the margin of safety.  With the GSM closing price on Jul 2, 2021 = $6.25,   the stock price has gained 1227% since April 14, 2020. 

Go to this link for the free mobile app for US listed shares with share prices below book value:

https://winged-prose-8987.glideapp.io/

Reference:

Graham, Benjamin and David, Dodd. 2008. Security Analysis, sixth edition.  New York: McGraw-Hill Education.