2 min read
Definition
Book value is the value at which an asset (or a company’s net assets) is carried in the accounts — the same concept as carrying value and net book value for assets. For a whole company it equals total assets minus total liabilities.
In plain terms
It is the accountant’s number, not the market’s. A company can be worth far more (or less) than its book value depending on brand, prospects and hidden value.
Why it matters for your company
Lenders compare book value with realistic market or fair value when sizing security. A wide gap either way is worth understanding. See valuation.
Related reading
Carrying value
Carrying value (or book value) is what an asset is shown as worth in the accounts — original cost less…
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Net book value is an asset's cost less accumulated depreciation — the balance-sheet figure, which may differ…
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Fair value
Fair value is what an asset would fetch in an orderly sale between willing, informed parties — the…
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Valuation
A valuation is a professional estimate of what an asset or business is worth — the figure lenders, buyers and…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.