314:. It is a valuation metric that sets the floor for stock prices under a worst-case scenario. When a business is liquidated, the book value is what may be left over for the owners after all the debts are paid. Paying only a price/book = 1 means the investor will get all his investment back, assuming assets can be resold at their book value. Shares of capital intensive industries trade at lower price/book ratios because they generate lower earnings per dollar of assets. Business depending on
210:
A corporation's book value is used in fundamental financial analysis to help determine whether the market value of corporate shares is above or below the book value of corporate shares. Neither market value nor book value is an unbiased estimate of a corporation's value. The corporation's bookkeeping
111:
is calculated to ensure that cash transactions have been recorded accurately. Depreciation is used to record the declining value of buildings and equipment over time. Land is not depreciated. Amortization is used to record the declining value of intangible assets such as patents. Depletion is used to
78:
An asset's initial book value is its actual cash value or its acquisition cost. Cash assets are recorded or "booked" at actual cash value. Assets such as buildings, land and equipment are valued based on their acquisition cost, which includes the actual cash cost of the asset plus certain costs tied
191:
of a mutual fund is the market value of assets owned by the fund minus the fund's liabilities. This is similar to shareholders' equity, except the asset valuation is market-based rather than based on acquisition cost. In financial news reporting, the reported net asset value of a mutual fund is the
355:
The issue of more shares does not necessarily decrease the value of the current owner. While it is correct that when the number of shares is doubled the EPS will be cut in half, it is too simple to be the full story. It all depends on how much was paid for the new shares and what return the new
155:
on the company's balance sheet, recorded in the account Bonds
Payable based on the contract amount. After the bonds are sold, the book value of Bonds Payable is increased or decreased to reflect the actual amount received in payment for the bonds. If the bonds sell for less than
341:
Comprehensive earnings/losses will increase/decrease book value and book/sh. Comprehensive earnings, in this case, includes net income from the Income
Statement, foreign exchange translation changes to Balance Sheet items, accounting changes applied retroactively, and the
79:
to the purchase of the asset, such as broker fees. Not all purchased items are recorded as assets; incidental supplies are recorded as expenses. Some assets might be recorded as current expenses for tax purposes. An example of this is assets purchased and expensed under
321:
Book value per share can be used to generate a measure of comprehensive earnings, when the opening and closing values are reconciled. BookValuePerShare, beginning of year – Dividends + ShareIssuePremium + Comprehensive EPS = BookValuePerShare, end of
192:
net asset value of a single share in the fund. In the mutual fund's accounting records, the financial assets are recorded at acquisition cost. When assets are sold, the fund records a capital gain or capital loss.
388:. Book value is the term which means the value of the firm as per the books of the company. It is the value at which the assets are valued in the balance sheet of the company as on the given date.
335:
The purchase of its own shares by the business will decrease total book value. Book/shares will decrease if more is paid for them than was received when originally issued (pre-existing book/sh).
266:
is often used since it focuses on the values that have been added and subtracted in the accounting books of a business (assets – liabilities). The term is also used to distinguish between the
103:
are used to reduce the book value of assets over time as they are "consumed" or used up in the process of obtaining revenue. These non-cash expenses are recorded in the accounting books
332:
The sale of shares/units by the business increases the total book value. Book/sh will increase if the additional shares are issued at a price higher than the pre-existing book/sh.
141:
The balance sheet valuation for an asset is the asset's cost basis minus accumulated depreciation. Similar bookkeeping transactions are used to record amortization and depletion.
238:
Since tangible common equity subtracts preferred equity from the tangible book value, it does a better job estimating what the value of the company is to holders of specifically
297:: The equity is bumped up by the exercise price of the options, warrants or preferred shares. Then it is divided by the number of shares that has been increased by those added.
195:
Financial assets include stock shares and bonds owned by an individual or company. These may be reported on the individual or company balance sheet at cost or at market value.
211:
or accounting records do not generally reflect the market value of assets and liabilities, and the market or trade value of the corporation's stock is subject to variations.
223:, has recently come into use by the U.S. federal government in the valuation of troubled banks. Tangible common equity is calculated as total book value minus
290:: The balance sheet equity value is divided by the number of shares outstanding at the date of the balance sheet (not the average o/s in the period).
235:, and can thus be considered the most conservative valuation of a company and the best approximation of its value should it be forced to liquidate.
160:, the contra account Discount on Bonds Payable is debited for the difference between the amount of cash received and the face value of the bonds.
718:
59:
of a company, is always ignored. When intangible assets and goodwill are explicitly excluded, the metric is often specified to be
683:
144:"Discount on notes payable" is a contra-liability account which decreases the balance sheet valuation of the liability.
203:
A company or corporation's book value, as an asset held by a separate economic entity, is the company or corporation's
591:
534:
488:
47:
and liabilities. However, in practice, depending on the source of the calculation, book value may variably include
894:
711:
802:
456:
207:, the acquisition cost of the shares, or the market value of the shares owned by the separate economic entity.
879:
889:
278:. It may be used interchangeably with carrying value. While it can be used to refer to the business' total
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32:
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100:
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will generate higher earnings per dollar of assets, so will trade at higher price/book ratios.
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119:. Contra accounts are used in bookkeeping to record asset and liability valuation changes.
56:
27:
account balance. For assets, the value is based on the original cost of the asset less any
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Depreciation expenses: building... debit = $ 150, under expenses in retained earnings
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Accounting Theory: Conceptual Issues in a
Political and Economic Environment
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Depreciation, amortization and depletion are recorded as expenses against a
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made against the asset. Traditionally, a company's book value is its
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The value of an asset according to its balance sheet account balance
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Accumulated depreciation: building... credit = $ 150, under assets
828:
86:
582:
Hermanson, Roger H., James Don
Edwards, R. F. Salmonson, (1987)
479:
Hermanson, Roger H., James Don
Edwards, R. F. Salmonson, (1987)
696:
525:
Wolk, Harry I., James L. Dodd and
Michael G. Tearney (2004).
123:
is a contra-asset account used to record asset depreciation.
270:
of any asset and its accounting value which depends more on
55:, or both. The value inherent in its workforce, part of the
376:, which is the original acquisition cost less accumulated
338:
Dividends paid out will decrease book value and book/sh.
242:
stock compared to standard calculations of book value.
363:
446:
356:capital earns once invested. See the discussion at
655:Stress Test for Banks Exposes Rift on Wall St.".
871:
493:
350:
187:such as bonds, stocks and commercial paper. The
368:Book value is often used interchangeably with
87:Depreciable, amortizable and depletable assets
712:
690:Use Book Value To Calculate Comprehensive EPS
112:record the consumption of natural resources.
663:
681:http://www.retailinvestor.org/earnings.html
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634:
245:
719:
705:
70:may refer to the book value of a company.
23:is the value of an asset according to its
214:
326:
198:
872:
529:, 6th ed. South-Western. pp. 330–331.
700:
670:Tangible Common Equity via Wikinvest
586:Volume II, Dow Jones-Irwin, p. 657.
483:Volume II, Dow Jones-Irwin, p. 694.
73:
13:
364:Net book value of long term assets
179:is an entity which primarily owns
163:
14:
906:
301:
168:In the United Kingdom, the term
66:In the United Kingdom, the term
674:
640:"US Eyes Large Stake in Citi",
621:
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803:Statement of changes in equity
726:
627:Groppelli, Angelico A. (2000)
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519:
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473:
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147:When a company sells (issues)
1:
503:, Fifth Edition, pp 318 – 319
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351:New share issues and dilution
447:Angolia, John R. (c. 1991).
7:
604:"SEC.gov – Net Asset Value"
391:
250:To clearly distinguish the
219:A variation of book value,
10:
911:
307:Book value is used in the
282:, it is most often used:
816:
785:
734:
408:List of accounting topics
172:may refer to book value.
254:of shares from the core
246:Stock pricing book value
121:Accumulated depreciation
767:Governmental accounting
642:The Wall Street Journal
295:diluted per share value
130:entry for depreciation
895:Management cybernetics
428:Tangible common equity
221:tangible common equity
215:Tangible common equity
83:of the U.S. tax code.
752:Management accounting
584:Accounting Principles
481:Accounting Principles
346:of options exercised.
327:Changes are caused by
880:Fundamental analysis
742:Financial accounting
686:2 April 2019 at the
514:Financial Accounting
418:Shareholders' equity
260:shareholders' equity
205:shareholders' equity
199:Corporate book value
57:intellectual capital
890:Valuation (finance)
844:Capital expenditure
808:Cash flow statement
757:Forensic accounting
659:, 24 February 2009,
644:, 23 February 2009,
153:long-term liability
61:tangible book value
834:Cost of goods sold
824:Debits and credits
657:The New York Times
499:Graham and Dodd's
91:Monthly or annual
867:
866:
839:Operating expense
772:Social accounting
512:Meigs and Meigs,
501:Security Analysis
398:Capital formation
225:intangible assets
151:, this debt is a
53:intangible assets
45:intangible assets
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793:Income statement
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631:, 4th ed., p.25.
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344:opportunity cost
256:ownership equity
233:preferred equity
181:financial assets
74:Asset book value
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37:impairment costs
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762:Fund accounting
747:Cost accounting
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688:Wayback Machine
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451:. J.R. Bender.
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329:
309:financial ratio
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288:per share value
272:historical cost
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217:
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189:net asset value
170:net asset value
166:
164:Net asset value
128:general journal
89:
76:
68:net asset value
40:
19:In accounting,
17:
12:
11:
5:
908:
898:
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777:Tax accounting
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516:4th ed. p. 90.
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423:Stock dilution
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370:net book value
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358:stock dilution
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200:
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185:capital assets
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162:
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138:
135:
117:contra account
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15:
9:
6:
4:
3:
2:
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592:1-55623-035-4
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573:Meigs, p. 313
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536:
535:0-324-18623-1
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489:1-55623-035-4
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403:Fixed capital
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371:
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316:human capital
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302:Uses of books
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34:
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25:balance sheet
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854:Gross income
849:Depreciation
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611:. Retrieved
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564:Meigs, p.105
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413:Market value
386:amortization
378:depreciation
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369:
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354:
294:
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276:depreciation
268:market price
263:
252:market price
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202:
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180:
174:
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143:
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125:
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114:
104:
97:amortization
93:depreciation
90:
77:
65:
60:
41:total assets
33:amortization
29:depreciation
20:
18:
555:Meigs, p.90
546:Meigs, p.91
262:, the term
177:mutual fund
81:Section 179
874:Categories
859:Net income
786:Statements
728:Accounting
458:0912138440
434:References
312:price/book
264:book value
158:face value
21:book value
382:depletion
101:depletion
684:Archived
467:24306203
392:See also
229:goodwill
49:goodwill
829:Revenue
629:Finance
613:9 April
608:sec.gov
126:Sample
590:
533:
487:
465:
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449:The HJ
280:equity
240:common
231:, and
43:minus
885:Asset
817:Terms
322:year.
293:As a
286:As a
149:bonds
105:after
735:Type
615:2018
588:ISBN
531:ISBN
485:ISBN
463:OCLC
453:ISBN
274:and
99:and
384:or
372:or
258:or
183:or
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