Book Value

Loading the player...

What is 'Book Value'

Book value is 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."

BREAKING DOWN '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

RELATED TERMS
  1. Net Tangible Assets

    Calculated as the total assets of a company, minus any intangible ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  3. Price to Tangible Book Value - ...

    A valuation ratio expressing the price of a security compared ...
  4. Adjusted Book Value

    A measure of a company's valuation after liabilities, including ...
  5. Asset Value Per Share

    The total value of a fund's investments divided by its number ...
  6. Long-Term Assets

    1. The value of a company's property, equipment and other capital ...
Related Articles
  1. Fundamental Analysis

    The Market Value Versus Book Value

    Understanding the difference between book value and market value is a simple yet fundamentally critical component to analyze a company for investment.
  2. 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.
  3. Economics

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
  4. Professionals

    Values Of Common Stock

    A common stock’s market value is determined by supply and demand and may or may not have any real relationship to what the shares are actually worth. The market value of common stock is ...
  5. Markets

    Investment Valuation Ratios: Price/Book Value Ratio

    By Richard Loth (Contact | Biography)A valuation ratio used by investors which compares a stock's per-share price (market value) to its book value (shareholders' equity). The price-to-book value ...
  6. Professionals

    Balance Sheet Components - Assets

    CFA Level 1 - Balance Sheet Components - Assets. Learn about the different types of assets. A top down approach into the components of long-term and current assets.
  7. Options & Futures

    Financial Statements: Long-Lived Assets

    By David Harper (Contact David)In the preceding section, we examined working capital, which refers to the current assets and liabilities of a company. In this section, we take a closer look at ...
  8. Forex Education

    Price To Book Ratio

    Investing is a complex and often daunting experience, these equations are actually quite simple.
  9. Entrepreneurship

    How to Calculate Your Tangible Net Worth

    Your net worth can be calculated with a simple equation.
  10. Active Trading

    Value Investing: Finding Value In Financial Reports And Balance Sheets

    There is plenty of information about a company that you'll want to know as a value investor, but that you can't get from a casual glance at a stock quote or from reading most stock market ...
RELATED FAQS
  1. What is the difference between book value and carrying value

    Dig deeper into the definitions of carrying value and book value, and learn to differentiate between their various financial ... Read Answer >>
  2. What is the difference between book value and market value

    Learn the differences between book value and market value, and see how investors use each type to determine if a company ... Read Answer >>
  3. 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 ... Read Answer >>
  4. What is the difference between a company's book value per share and its intrinsic ...

    Book value and intrinsic value are two ways to measure the value of a company.In simple terms, book value is based on the ... Read Answer >>
  5. What is the difference between carrying value and fair value?

    Learn about the carrying value and fair value of assets and liabilities, what the carrying and fair value measure and the ... Read Answer >>
  6. Who uses book value to estimate the value of a company?

    Understand the meaning of the term "book value" and how it is used by market analysts to estimate the worth or market value ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center