book value

noun
Updated on: 21 Nov 2017

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

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

Recent Examples of book value from the Web

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.

First Known Use of book value

1839


Financial Definition of BOOK VALUE

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.


BOOK VALUE Defined for English Language Learners

book value

noun

Definition of book value for English Language Learners

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


Law Dictionary

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

Learn More about book value


Seen and Heard

What made you want to look up book value? Please tell us where you read or heard it (including the quote, if possible).

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

WORD OF THE DAY

sticky or viscid

Get Word of the Day daily email!

Test Your Vocabulary

Find the Cousins

  • a-large-tree-with-many-branches
  • Which pair shares a common word ancestor?
Name That Thing

Test your visual vocabulary with our 10-question challenge!

TAKE THE QUIZ
SCRABBLE® Sprint

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!