DEFINITION of Above Water
Above water is a colloquial term that refers to a situation where the ending market value or current market value of an asset is greater than the beginning market value or book value of the asset. It may also refer to a situation where a person stays out of financial or economic trouble, or a situation in which a company remains financially viable.
BREAKING DOWN Above Water
Generally, the book value of an asset listed on a company's balance sheet cannot be adjusted according to Generally Accepted Accounting Principles (GAAP). Should the asset appreciate, its current market value would be higher than its book value, and it would be referred to as "above water." For example, if a company purchased a piece of land for $100,000 and the company later discovered an oil reserve on the property, and the market value of the land increased to $200,000, the land would be considered to be above water, because the current market value is greater than the beginning value (its purchase price).
The term may also be used in the context of "keeping their head above water," symbolizing the ability to stay alive. For example, company XYZ managed to increase profits last quarter, even though revenues dropped. XYZ may be described as having "kept its head above water" through these actions, because it remained profitable and financially viable.