- book value
- 1) See: net book value2) (net asset value)The value of a company calculated as that of its total assets less intangible assets and liabilities. The information required to calculate the book value is all in the balance sheet. However, it can be very misleading to measure value on this basis, as assets (stocks, buildings, land) are historical accounting figures. The book value of a company is often compared to its market value, particularly as a means of valuing intangible assets (see intellectual capital). Coca-Cola and Dell Computers are examples of companies whose book value is 10% or less of the market value. The market-to-book ratio is calculated by taking current market price per share and dividing by the book value per share. This ratio indicates management's success in creating value for its shareholders, with a high ratio being preferred. The ratio can be compared over time and against other companies.
Accounting dictionary. 2014.
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