Home Investing Dictionary Investment Formula Net Book Value ( NBV )
Net Book Value ( NBV )
Written by Kenny Foo   
Thursday, 19 March 2009 00:00

Investment Formula Description

Net Book value ( NBV ) is net value of an asset, which equal to its original cost minus accumulated depreciation and amortization.

Hence, sometimes, net book value ( NBV ) for an asset is also referred as depreciated cost or book value. If apply on companies, net book value has same meaning with book value or net asset value ( NAV ) , which is net value for an company and will be used in price book ratio ( P/B ratio ) and market to book ratio to compare market value and book value of an company. Net book value ( NBV ) for assets is purely estimate as the prediction on an asset's useful life might not accurate. However, net book value ( NBV ) can give investors the rough idea of the asset values. Besides, for assets, net book value ( NBV ) can be used to measure the value of long term liabilities, which will be amortized, such as bonds.


Investment Formula

Net Book value ( NBV ) = Cost of Assets - Accumulated depreciation

Net Book value ( NBV ) = Total Assets - Intangible Assets - Liabilities


Investment Formula Example

Corporation XYZ bought a machine with $3,000 and expect it has useful life of 3 years. On the next year, the net book value ( NBV ) calculation for this machine is as following.

Accumulated Depreciation = Depreciation per year X Total Years =  1,000 X 1 = $1,000

Net Book Value ( NBV ) = Cost of Assets - Accumulated Depreciation = 3,000 - 1,000 = $2,000

The net book value ( NBV ) for this machine on next year is $2,000 after it was depreciated for $1,000. Another year later, the net book value ( NBV ) for this machine will become $1,000.


The following example is net book value ( NBV ) 's example for companies.Total Assets for corporation XYZ is $500,000 while the intangible assets is $250,000 and the liabilities is $70,000. The net book value ( NBV )  calculation for corporation XYZ is as following.

Net Book Value ( NBV )  = Total Assets - Intangible Assets - Liabilities = 500,000 - 250,000 -70,000 = $ 180,000

The net book value ( NBV ) for corporation XYZ is $180,000.

Add this page to your favorite Social Bookmarking websites
Reddit! Del.icio.us! Mixx! Free and Open Source Software News Google! Live! Facebook! StumbleUpon! Yahoo! Free Joomla PHP extensions, software, information and tutorials.
Last Updated ( Thursday, 19 March 2009 16:32 )
SocialTwist Tell-a-Friend

Investing Newsletters

Enter your email address:

World Indices

Copyright © 2010 Start-Investing.com - Best Investment Advice and Investment Guide Online. All Rights Reserved.
Joomla! is Free Software released under the GNU/GPL License.