Why is it Called ‘Book Value’?
“Book value” is so named because it represents the recorded value of assets and liabilities in a company’s financial books or accounting records. It reflects the historical cost of assets at the time of acquisition, adjusted for depreciation, amortization, and impairments over time, in accordance with accounting principles. This value serves as the basis for financial reporting, providing stakeholders with essential information about a company’s financial position, assets, and liabilities. By relying on objective historical data rather than subjective estimates or market fluctuations, book value ensures consistency and transparency in financial reporting, facilitating informed decision-making by investors, analysts, and other stakeholders.