Definition

Noun: - The value at which an asset is carried on a balance sheet; equals cost minus accumulated depreciation. This is an accounting term representing the net value of a company's asset as recorded in its financial books. It is calculated by taking the original cost of the asset and subtracting the total amount of depreciation, amortization, or impairment costs that have been applied against it over time.

Usage

• Book value is used primarily in accounting, finance, and investment contexts to assess a company's net asset value.
• It is a key metric for comparing a company's market value to its accounting value.
• It is often used on a per-share basis (book value per share) for equity valuation.

Examples

• The company's book value has increased steadily over the past five years due to conservative depreciation policies.
• Investors often look for stocks trading below their book value, seeing them as potentially undervalued.
• When the factory was sold, the sale price was significantly higher than its book value on the balance sheet.

Advanced Usage

• "To be carried at book value": Describes an asset whose recorded value on the balance sheet is its book value.
  • The land is carried at book value, as it is not subject to depreciation.
• "Book value vs. Market value": A common comparison in finance, where market value is the current price in the market, which can be higher or lower than the book value.
  • The discrepancy between the company's market value and its book value puzzled analysts.

Variants and Related Words

• Book Value Per Share (BVPS): A ratio calculated by dividing total common equity by the number of outstanding common shares.
  • A low BVPS can sometimes indicate a company is undervalued.
• Net Book Value: Another term for book value, emphasizing it is the net amount after deductions.
• Carrying Value: A synonym often used interchangeably with book value.

Synonyms

• Carrying amount
• Net asset value (NAV) (particularly for investment funds)
• Carrying value

Related Concepts (Not Phrasal Verbs or Idioms)

• Impairment: A reduction in the recoverable value of an asset below its book value, requiring a write-down.
• Depreciation: The systematic allocation of an asset's cost over its useful life, which reduces its book value.
• Balance Sheet: The financial statement where book values are reported.

Noun

1. the value at which an asset is carried on a balance sheet; equals cost minus accumulated depreciation