What Is Net Book Value?

Net book value, also known as book value or net asset value, refers either to the value of an asset as reflected on a company's balance books or to the theoretical value of a company if it is liquidated.

An Asset's Net Book Value

You can determine an asset's net book value by subtracting accumulated depreciation from the asset's initial cost. For instance, if a company purchases an asset (such as a vehicle, a machine or a building) for $20,000 and the asset depreciates at $3,000 a year, after five years the asset will have a net book value of $5,000.

A Company's Net Book Value

You can determine a company's net book value by subtracting the value of its intangible assets (such as patents, trademarks or leaseholds) and its liabilities from its total assets. If a company's total assets are worth $1 million and its intangible assets and liabilities amount to $700,000, the company's net book value is $300,000.

Net Book Value Per Share

To calculate how much money per share a company's stockholders would receive if it were liquidated, divide the company's net book value by the number of its outstanding shares. For example, stockholders of a company with a net book value of $400,000 and 50,000 outstanding shares could--at least theoretically--expect $8 per share.

References

• Investopedia: What Is the Difference between a Company's Book Value Per Share and Its Intrinsic Value Per Share?
• Investor Glossary: Net Book Value
• Start Investing: Book Value
• Start Investing: Intangible Assets
• Start Investing: Net Book Value