net book value definition. What is net book value? With financial expert-approved content, discover how to calculate net book value like a professional. What is a Price-to-Book Ratio (P/B)? The price-to-book ratio measures a company's market price in relation to its book value. The ratio denotes how much equity investors are paying for each dollar in net assets. Book value, usually located on a company's balance sheet as 'stockholder equity,' represents the total amount that would be left over if the company liquidated all of its assets and ... Tangible book value per share (TBVPS) equals a company's net tangible assets divided by its number of shares outstanding.
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For example, a company that owns commercial real estate with a resale value of $1 million may have fully depreciated the asset on the balance sheets to indicate a net value of zero. In this example the book value of the asset -- and perhaps of the organization as a whole -- would therefore be understated. What is book value and why is it important? With real-world examples, learn how to calculate this financial element by using the book value formula. Most commonly used in reference to mutual or closed-end funds, net asset value (NAV) measures the value of a fund's assets, minus its liabilities.
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