Book Value Definition And Formula

The book value figure is typically viewed in relation to the company s stock value market capitalization and is determined by taking the total value of a company s assets and subtracting any of the liabilities the company still owes.

Book value definition and formula. Assets book value formula total value of an asset depreciation other expenses directly related to it. Below is the book value formula. When compared to the current market value per share the book value per share can provide information on how a company s stock is valued.

Book value of assets formula. Total value of the asset value at which the asset is purchased. The formula to calculate book value is as follows.

The book value per share bvps is calculated by taking the ratio of equity available to common stockholders against the number of shares outstanding. Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. For assets the value is based on the original cost of the asset less any depreciation amortization or impairment costs made against the asset.

Sample calculation of net book value. Book value cost accumulated depreciation for example michael s 2014 sports car cost 60 000 when he purchased it. Depreciation periodic reduction in the value of the asset amortized as per standards.

Traditionally a company s book value is its total assets minus intangible assets and liabilities. The company s balance sheet. In accounting book value is the value of an asset according to its balance sheet account balance.

You can use the following formula to calculate book value per share. Accumulated depreciation per year depreciation x total number of years. Other cost include impairment cost and related costs.