How is book value calculated?

The correct method for calculating book value involves determining the company's equity, which is often expressed on a per-share basis. This is done by taking net worth—essentially the residual interest of the owners in the company after liabilities are settled—and dividing it by the number of outstanding shares. This calculation gives a clear perspective on what each share represents in terms of the company's actual value.

Total assets minus total liabilities represents the overall book value of the company in aggregate, but when looking for book value on a per-share basis, net worth (or equity) divided by the number of outstanding shares is the most relevant approach. This method helps investors understand the value of their investment relative to the company's performance and financial standing. Thus, option B accurately captures the essence of how to derive book value per share.