Book Value
Book Value is an accounting measures of the equity of a business/asset after subtracting a companies liabilities from assets.
- Book value is an accounting measure
- It may not represent the true value of an asset in the open markets
- Certain assets like real estate can have significantly higher real market values than book value
- Other assets like automobiles may have significantly lower real market values than book value
Calculating Book Value for A Single Asset
- Subtract depreciation, amortization and/or impairment costs from the original cost of the asset
Calculating Book Value for an Entire Company
- Book Value for a company is an accounting measure based on a companies balance sheet
- Subtract intangible assets and all liabilities from a companies total assets to calculate book value
Tangible Book Value
- Sometime book value may include goodwill and/or intangible assets, sometimes it doesn't
- When intangible assets and goodwill are explicitly excluded, the metric can be defined as "Tangible Book Value