book value

noun

Definition of book value

: the value of something as shown on bookkeeping records as distinguished from market value:
a : the value of an asset equal to cost minus depreciation
b : the value of a corporation's stock equal to its book value minus its liabilities

Examples of book value in a Sentence

I paid $4,100 for the car four years ago, but its book value is now under $500.

Recent Examples on the Web

And valuations based on aggregate earnings or book value predict stock returns just as well as the dividend yield. The Economist, "Why yields are the best guide to future stockmarket returns," 7 Sep. 2019 Deutsche’s return on equity is forecast to hit 5% in 2021, according to FactSet, and its book value ought to get to about €31.60. Paul J. Davies, WSJ, "Why Deutsche’s New Investor Is No Warren Buffett," 2 Nov. 2018 Terms of the deals were not disclosed, but GE said that the $3.6 billion worth of assets held by PK AirFinance are being sold for a price above their book value. BostonGlobe.com, "GE’s latest sales piece: a slice of its aviation lending unit," 30 Aug. 2019 There are many tools available that offer some insight: PE ratios, book values, and so forth. Steve Booren, The Denver Post, "Improving Investor Behavior: Mind your owned businesses," 18 Aug. 2019 Aliso Canyon had a net book value of $724 million at the end of 2018, according to financial filings by Sempra Energy. Sammy Roth, latimes.com, "After Aliso Canyon, a gas pipeline exploded — and Californians lost $1 billion," 11 July 2019 Shares of both banks have tumbled in recent years, and the two trade at substantial discounts to the book value of their assets. Washington Post, "Germany’s Big Banking Merger, in Charts," 18 Mar. 2019 After it was unveiled, the share price fell to new lows, of just a fifth of net book value. The Economist, "Recognising reality at Deutsche Bank," 11 July 2019 Warren Buffett’s announcement in his annual letter that Berkshire Hathaway would no longer report its remarkable record of wealth creation in terms of book value caused a stir. Spencer Jakab, WSJ, "Warren Buffett, by the Book," 26 Feb. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'book value.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of book value

1839, in the meaning defined above

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Last Updated

13 Oct 2019

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The first known use of book value was in 1839

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More Definitions for book value

book value

noun

Financial Definition of book value

What It Is

Book value refers to the total amount a company would be worth if it liquidated its assets and paid back all its liabilities. Book value can also represent the value of a particular asset on the company's balance sheet after taking accumulated depreciation into account.

How It Works

Book value is calculated by taking a company's physical assets (including land, buildings, computers, etc.) and subtracting out intangible assets (such as patents) and liabilities -- including preferred stock, debt, and accounts payable. The value left after this calculation represents what the company is intrinsically worth.

Thus, book value is calculated:

Book value = total assets - intangible assets - liabilities

Why It Matters

Since book value represents the intrinsic net worth of a company, it is a helpful tool for invThe definition of book value on InvestingAnswersestors wanting to determine if a company is underpriced or overpriced, which could indicate a potential time to buy or sell. For instance, value investors search for companies trading for prices at or below book value (indicating a price-to-book ratio of less than 1.0), which implies the shares are selling for less than the company's actual worth.

Source: Investing Answers

book value

noun

English Language Learners Definition of book value

finance : the amount of money that something (such as a car) is officially worth based on its age, style, condition, etc.

book value

noun

Legal Definition of book value

: the value of something as shown on bookkeeping records as distinguished from market value: as
a : the value of an asset equal to cost less depreciation
b : the value of a corporation's capital stock expressed as its original cost less depreciation and liabilities

More from Merriam-Webster on book value

Rhyming Dictionary: Words that rhyme with book value

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