Replacement cost

Replacement cost is what it would cost to build or acquire an equivalent set of assets from scratch today, a factory, a distribution network, a brand, a customer base. It answers a different question than book value, which reflects what an asset cost when it was originally purchased, adjusted for depreciation, not what building the same thing today would require.

A business trading for less than its own replacement cost is priced below what a competitor would have to spend to recreate it, which also doubles as a rough check on how defensible its market position is. If a rival could build the same thing more cheaply than the market currently prices the incumbent, that difference invites competition rather than protects it.