Friday, September 21, 2018

Book Value

Term Definition
Book Value

The net value of an asset as shown on a company's balance sheet.

When all accounting records were recorded in books, the "book value" was the value at which an asset was recorded on the accounting books, after any appropriate reductions such as, in appropriate cases, depreciation or the like.  When discussing an asset's book value, this typically is based on the asset's original cost less accumulated depreciation. When we discuss the book value per share of the common stock of a company, we are referring to the net book value of all the assets of the company  divided by the number of shares.  For example, the tangible book value of the common stock is defined as total assets minus liabilities minus preferred stock minus intangible assets; and therefore the tangible book value per share is the net total amount described in the previous sentence divided by the number of shares of common stock.