Book Value

AAA

DEFINITION of 'Book Value'

1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation.

2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on.

Also known as "net book value (NBV)."

In the U.K., book value is known as "net asset value."

INVESTOPEDIA EXPLAINS 'Book Value'

Book value is the accounting value of a firm. It has two main uses:

1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated.

2. By being compared to the company's market value, the book value can indicate whether a stock is under- or overpriced.

3. In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment.

For more information, check out Digging Into Book Value

VIDEO

RELATED TERMS
  1. Full Value

    The total worth of a financial instrument or organization. Full ...
  2. Acquisition Adjustment

    The difference between the price an acquiring company pays to ...
  3. Impaired Capital

    1. When a bank's actual assets are worth less than their stated ...
  4. Book Value Of Equity Per Share ...

    A financial measure that represents a per share assessment of ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  6. Above Water

    1. Refers to the condition of a company's asset when its actual ...
Related Articles
  1. Fundamental Analysis

    Is book value a better metric for company worth than the PE ratio?

    Determine the best situations in which to utilize book value, P/E ratio and other metrics to determine the true worth of a company.
  2. Fundamental Analysis

    What is the difference between book value and salvage value

    Discover the difference between two valuations, the book value and the salvage value, and the respective purpose of each type of value.
  3. Fundamental Analysis

    What is the difference between an income statement and a balance sheet?

    Find the current value of a business by reading the balance statement and determine whether operations are efficient by analyzing the income statement.
  4. Fundamental Analysis

    How is impairment loss calculated?

    Learn how companies re-evaluate their assets and compare them against book values to recognize impairment and why this strategy is important.
  5. Fundamental Analysis

    What are the differences between gains & losses and revenue & expenses?

    Learn how to distinguish between gains, losses, revenues and expenses. Take a look at how accountants record each category on an income statement.
  6. Investing

    What's the difference between book and market value?

    Book value is the price paid for a particular asset. This price never changes so long as you own the asset. On the other hand, market value is the current price at which you can sell an asset. ...
  7. Forex Education

    Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  8. Investing Basics

    Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  9. Markets

    How To Analyze A Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
  10. Markets

    Book Value: How Reliable Is It For Investors?

    In theory, a low P/B ratio means you have a cushion against poor performance. In practice, it is much less certain.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center