book value

Book value

A company's total assets minus intangible assets and liabilities, such as debt. A company's book value might be higher or lower than its market value.

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Net Asset Value

In stocks and businesses, an expression of the underlying value of the company. That is, it is a statement of the value of the company's assets minus the value of its liabilities. One way of thinking about the net asset value is that it is the underlying value of a company, not the value dictated by the supply and demand of shares or its market capitalization. It is also called the book value.

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book value

1. The net dollar value at which an asset is carried on a firm's balance sheet. For example, a building that was purchased for $900,000 but that has depreciated $200,000 has a book value of $700,000. Book value, an accounting concept, often bears little relation to an asset's market value. Also called carrying value, depreciated cost.

2. See book value per share.

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Book value. Book value is the net asset value (NAV) of a company's stocks and bonds.

Finding the NAV involves subtracting the company's short- and long-term liabilities from its assets to find net assets. Then you'd divide the net assets by the number of shares of common stock, preferred stock, or bonds to get the NAV per share or per bond.

Book value is sometimes cited as a way of determining whether a company's assets cover its outstanding obligations and equity issues.

Further, some investors and analysts look at the price of a stock in relation to its book value, which is provided in the company's annual report, to help identify undervalued stocks. Other investors discount the relevance of this information.

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book value

The value of an asset as reflected on the books and records of a company,taking into account the original book cost of acquisition and then deducting depreciation expenses charged over the years and adding capital expenditures.Book value rarely bears any relationship to the true value of assets.

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Book Value

What Does Book Value Mean?

(1) The value at which an asset is carried on a balance sheet; in other words, the cost of an asset minus accumulated depreciation. (2) The net asset value of a company, calculated as 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, and service charges. In the United Kingdom book value is called net asset value.

Investopedia explains Book Value

Book value is the accounting value of a firm. It has three main uses: (1) It is the total value of the company's assets that shareholders theoretically would receive if a company were liquidated. (2) By comparing a company's book value with its market value, one sees whether its 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 minus the book value is the capital gain (or loss) from the investment.

Related Terms:
• Depreciation
• Intangible Asset
• Intrinsic Value
• Net Asset Value—NAV
• Price-to-Book Ratio—P/B Ratio