Definition of book value

Blue book value definition in the cambridge english dictionary. The value of an asset as it is carried on the companys books. The book value figure is typically viewed in relation to the companys stock value. Depreciation reflects the decrease in the useful life of an asset due to use of the asset. Finding the nav involves subtracting the companys short and longterm liabilities from. If you want to compare companies, you can convert to book value per share, which is simply the book value divided by the number of outstanding shares. Liabilities include monies owed and operating expenses. This means the total value of its assets not including intangible assets with no immediate cash value, such as goodwill. Book value is often used interchangeably with net book value or carrying value, which is the original acquisition cost less accumulated depreciation, depletion or amortization. Book value of an asset is the value at which the asset is carried on a balance sheet and calculated by taking the cost of an asset minus the accumulated depreciation. Mar 02, 2020 the term blue book value refers to the value of a vehicle by a guide known as the kelley blue book. Because, according to the provisions of gaap, an assets bv cannot show any increase or decrease in the assets market value, it rarely reflects the. Book value or carrying value is the net worth of an asset that is recorded on the balance sheet. Book value dictionary definition book value defined.

An assets book value is equal to its carrying value on the balance sheet, and companies calculate it by netting the asset against its. Nbv is calculated using the assets original cost how much it cost to acquire the asset with the depreciation, depletion, or amortization of the asset being subtracted from the assets original cost. The book value for real and personal property is typically the original cost of the property less depreciation. Value definition is the monetary worth of something.

Net book value legal definition of net book value by law. Book value is a key measure that investors use to gauge a stocks valuation. Book value definition in the cambridge english dictionary. Book value definition of book value by merriamwebster. Net book value means, i for any vehicle, the net book value of such vehicle as reflected on the books of the company in accordance with gaap, after netting out without limitation a the cost of payoff of any lien including any consumer lien on such vehicle excluding the lien of the administrative agent under the loan documents and b reserves maintained in accordance with the company. Also referred to as the net asset value in the uk, it helps determine the amount of money a shareholder or investor would receive per share if a company was liquidated, selling all of its assets and paying back all liabilities. Book value bedeutung im cambridge englisch worterbuch. As the company makes its contractually obligated payments, a portion of each payment is allocated to the reduction of principal as well as to interest expense. Book value definition and meaning collins english dictionary. Mar 28, 2017 book value of equity is a very different thing from the value of the companys shares on the stock market. Book value, for assets, is the value that is shown by the balance sheet of the company. The book value of an asset at any time is its cost minus its accumulated depreciation. Written down value of an asset as shown in the firms balance sheet.

In the case of a company, the book value represents its net worth. Book value definition, importance, and the issue of intangibles. Book value is a companys equity value as reported in its financial statements. Book value definition is the value of something as shown on bookkeeping records as distinguished from market value how to use book value in a sentence.

Net book value is the value at which a company carries an asset on its balance sheet. Book value definition of book value by the free dictionary. The book value of a company is the total value of the companys. Net book value nbv represents the carrying value of assets reported on the balance sheet, and is calculated by subtracting accumulated depreciation from the original purchase cost of the asset. Since companies are usually expected to grow and generate more. Book value definition, the value of a business, property, etc. It is basically used in liquidity ratios where it will be compared to the total assets of the company to check if the organization is having enough support to overcome its debt. The book value of equity can be considered to be the amount that the owners of the company will receive if the business is closed down and its liabilities paid off. The pricetobook ratio pb ratio is a ratio used to compare a stocks market value to its book value. Book value financial definition of book value financial dictionary. Book value of debt is the total amount which the company owes, which is recorded in the books of the company.

For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Aug 07, 2012 the pricetoeconomic book value pricetoebv ratio measures the difference between the markets expectations for future profits and the nogrowth value of the stock. Net book value meaning in the cambridge english dictionary. Book value per share financial definition of book value per share. Companies use book value to determine the point at which they have recovered the cost of an asset. In other words, book value is the companys total tangible assets less its total liabilities. Feb 04, 2019 while book value per share is a good way to evaluate a stock, its more of an accountingbased tool and doesnt necessarily reflect the true market value of a publicly traded company companies. Net book value nbv refers to a companys assets or how the assets are recorded by the accountant. While the book value of an asset may stay the same over time by. Net book value the current book value of an asset or liability. Book value is strictly an accounting and tax calculation. Book value refers to the total amount a company would be worth if it liquidated its assets and paid back all its liabilities. Oct 30, 2018 book value, also called carrying value or net book value, is an assets original cost minus its depreciation. Dec 14, 2018 the book value of an asset is the value of that asset on the books the accounting books and the balance sheet of the company.

Book value is calculated by subtracting any accumulated depreciation from an assets purchase price or historical cost. Mar 19, 2020 book value is the total value of a business assets found on its balance sheet, and represents the value of all assets if liquidated. In business, the book value of an asset is the value it is given in the account books of. Book value is the total value of a business assets found on its balance sheet, and represents the value of all assets if liquidated. Traditionally, a companys book value is its total assets minus intangible assets and liabilities. Information and translations of book value in the most comprehensive dictionary definitions resource on the web. Net asset value in stocks and businesses, an expression of the underlying value of the company.

A companys common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock. Book value, or net book value, is the term used to describe how much a business or asset is worth according to its financials. Listed automobiles are appraised, and market values assigned. Book value is an accounting term denoting the portion of the company held by the shareholders at accounting value not market value. Understanding book value and market value is helpful in determining a. The value left after this calculation represents what the company is intrinsically worth. A companys common stock equity as it appears on a balance sheet, equal to total assets minus liabilities, preferred stock, and intangible assets such as goodwill. Mar 28, 2017 book value of debt for accounting purposes, debt is tracked using something called an amortization table. Book value the value of an organizations assets as carried on the balance sheet in accordance with generally accepted accounting principles gaap. Net book value is calculated by subtracting accumulated depreciation from the original cost of the asset. Book value is the term which means the value of the firm as per the books of the company. This is how much the company would have left over in assets if it went out of business immediately. An assets original cost goes beyond the ticket price of the itemoriginal cost includes an assets purchase price and the cost of setting it up e.

The term book value derives from the accounting practice of recording asset value at the original historical cost in the books. It is calculated by dividing the current closing price of. Net book value in accounting, an assets original price minus depreciation and amortization. The book value definition refers to a companys value or net worth that is recorded on its financial statement. As per generally accepted accounting principles, the asset should be recorded at their historical cost less accumulated depreciation. Book value is calculated by taking a companys physical assets including land, buildings, computers, etc. Difference between book value and market value with. That is, it is a statement of the value of the companys assets minus the value of its. Its important to note that the book value is not necessarily the same as the fair market value the amount the asset could be sold for on the open market. Price to book value is a financial ratio used to compare a companys book value to its current market price. Bv is computed by deducting accumulated depreciation from the purchase price of the asset. In many instances, and especially in the case of companies that have a sound business model and efficient management, the market value exceeds the book value of equity by a wide margin.

Definition of book value in accounting, book value refers to the amounts contained in the companys general ledger accounts or books. Book value can also represent the value of a particular asset on the companys balance sheet after taking accumulated depreciation into account. Then youd 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. The book value of a company is the total value of the companys assets, minus the companys outstanding liabilities.

A companys book value might be higher or lower than its market value. Mar 02, 2020 the kelley blue book value is a price for a particular automobile make and model from the largest automotive valuation company in the u. The guide not only lists the value of new vehicles, but it also lists used car values. People often use the term net book value interchangeably with net asset value nav, which refers to a companys total assets minus its total liabilities. It is equal to the cost of the asset minus accumulated depreciation. Net book value financial definition of net book value. Book value is the net asset value nav of a companys stocks and bonds. Book value of debt definition, formula calcuation with. Jan 29, 2018 book value appeals more to value investors who look at the relationship to the stocks price by using the price to book ratio. Finding the nav involves subtracting the companys short and longterm liabilities from its assets to find net assets. Book value a companys total assets minus intangible assets and liabilities, such as debt. In accounting, book value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset.