Book Value Definition And Formula

In other words it is the ratio of available common equity to the number of outstanding common shares.

Book value definition and formula. Calculating net book value. Net book value original asset cost accumulated depreciation. When it reaches the end of its useful life the nbv should be equal to its salvage value.

Below is the book value formula. Book value cost accumulated depreciation for example michael s 2014 sports car cost 60 000 when he purchased it. Accumulated depreciation per year depreciation x total number of years.

If the value of bvps exceeds the market value per share the. For assets the value is based on the original cost of the asset less any depreciation amortization or impairment costs made against the asset. Alternatively book value can be calculated as the sum total of the overall shareholder equity of the company.

The formula to calculate book value is as follows. You can use the following formula to calculate book value per share. Book value per share is a measure of the amount of equity that s available to common shareholders on a per share basis.

Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. Other cost include impairment cost and related costs. 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.

The formula for calculating nbv is as follows. Total value of the asset value at which the asset is purchased. The book value shown on the balance sheet is the book value for all assets in that specific category.