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. Above Water

    1. Refers to the condition of a company's asset when its actual ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  6. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
Related Articles
  1. What is the difference between an income ...
    Fundamental Analysis

    What is the difference between an income ...

  2. What are the differences between gains ...
    Fundamental Analysis

    What are the differences between gains ...

  3. How is impairment loss calculated?
    Fundamental Analysis

    How is impairment loss calculated?

  4. What's the difference between book and ...
    Investing

    What's the difference between book and ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center