book value
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1. Accounting
recorded value of asset the value of an asset as recorded in a company's balance sheet, usually the original cost with an allowance made for depreciation. Book value is not usually the same as market value (the amount it could be sold for).
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2. Stockholding & Investments
firm's own valuation of its stock the value of a company's stock according to the company itself, which may differ considerably from the market value. Book value is calculated by subtracting a company's liabilities and the value of its debt and preferred stock from its total assets. All of these figures appear on a company's balance sheet. For example:
$ Total assets 1,300 Current liabilities −400 Long-term liabilities, preference shares −250 Book value = 650 Book value represents a company's net worth to its stockholders. When compared with its market value, book value helps reveal how a company is regarded by the investment community. A market value that is notably higher than the book value indicates that investors have a high regard for the company. A market value that is, for example, a multiple of book value suggests that investors' regard may be unreasonably high.
Related definitions of "book value"
- Also called carrying amount, carrying value
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