Book Value


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."


Loading the player...


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

  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. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  5. Above Water

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

    An accounting measure of value, where the value of an asset or ...
Related Articles
  1. Technical Indicators

    Key Financial Ratios to Analyze Airline Companies

    Examine some of the most important financial ratios and performance metrics investors use to evaluate companies in the airline industry.
  2. 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!
  3. Investing Basics

    Digging Into Book Value

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

    How To Analyze A Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
  5. 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.
  6. Forex

    Understanding Book Value

    Book value is a component in many ratios that investors use to evaluate stocks. Find out how it is calculated and what it reveals about a company.
  7. Markets

    Introduction To Fundamental Analysis

    Learn this easy-to-understand technique of analyzing a company's financial statements and reports.
  8. Options & Futures

    Advanced Financial Statement Analysis

    Learn what it means to do your homework on a company's performance and reporting practices before investing.
  9. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  10. Professionals

    4 Must Watch Films and Documentaries for Accountants

    Learn how these must-watch movies for accountants teach about the importance of ethics in a world driven by greed and financial power.
  1. Are companies with high Book Value Of Equity Per Share (BVPS) takeover targets?

    Companies with high book value of equity per share (BVPS) can be good takeover targets if those companies are public and ... Read Full Answer >>
  2. What metrics can be used to analyze a telecommunications company if they have very ...

    Telecommunications companies play a very crucial role in the economy by providing access to voice, text, video and other ... Read Full Answer >>
  3. What are the advantages and disadvantages of capitalizing interest for tax purposes?

    The advantages and disadvantages of capitalizing interest for tax purposes lie in a company's ability to manage or manipulate ... Read Full Answer >>
  4. How is a goodwill impairment recorded on a company's financial statements?

    Goodwill impairment is recorded on a company's financial statements by reducing the goodwill asset account on the company's ... Read Full Answer >>
  5. What is the average price-to-book ratio of companies in the Internet sector?

    The average price-to-book ratio (P/B) of companies in the Internet sector is 4.965 for 2014 and 4.43 for Q1 of 2015, according ... Read Full Answer >>
  6. What is price-to-book ratio is typical in the electronics sector?

    In fundamental analysis, book value is an important concept for measuring a business's value. Book value equals total assets ... Read Full Answer >>
  7. How does fundamental analysis differ from technical analysis?

    Technical analysis and fundamental analysis are two distinct approaches to equity investment. Fundamental analysis is typically ... Read Full Answer >>
  8. How do businesses determine if an asset may be impaired?

    In the United States, assets are considered impaired when net carrying value (book value) exceeds expected future cash flows. ... Read Full Answer >>
  9. Who uses book value to estimate the value of a company?

    Book value is primarily used by equity investors; common and preferred stockholders; and stock market analysts to estimate ... Read Full Answer >>
  10. What is the difference between book value and salvage value

    Book value and salvage value are two vastly different measures of value. Book value attempts to approximate the fair market ... Read Full Answer >>
  11. Is book value a better metric for company worth than the PE ratio?

    Book value can be a better metric than the P/E, or price to earnings, ratio in certain circumstances, but a company’s true ... Read Full Answer >>
  12. How is impairment loss calculated?

    Impairment occurs when a business asset suffers a depreciation in fair market value in excess of the book value of the asset ... Read Full Answer >>
  13. What is the difference between an income statement and a balance sheet?

    Businesses produce a set of financial statements that reflect business activities, revenues and expenses for each accounting ... Read Full Answer >>
  14. What are the differences between gains & losses and revenue & expenses?

    Most companies include revenues, gains, expenses and losses in their income statements. Though some of the terms sound similar, ... Read Full Answer >>
  15. 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 Full Answer >>
  16. 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 Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center