book value (BV)

Definition 1

Capital asset: Written down value of an asset as shown in the firm's balance sheet. BV is computed by deducting accumulated depreciation from the purchase price of the asset. Because, according to the provisions of GAAP, an asset's BV cannot show any increase or decrease in the asset's market value, it rarely reflects the asset's true worth.

Definition 2

Common stock: Amount that shareholders would (in theory) receive for each share if the firm's assets were sold (liquidated). Computed by dividing BV of the firm by the number of shares held by the shareholders (outstanding shares).

Definition 3

Firm: Net worth of a firm reflected in its balance sheet as owners' (shareholders') equity. It is computed by adding up all (equity and debt) capital invested since the firm's inception and deducting all liabilities. As in the case of the capital assets, the BV of a firm usually bears little or no resemblance to its true or market value.

Definition 4

Liability: Full amount (par value) of a liability less sums already paid. Also called basis value or carrying value.