Net Book Value
What does it mean
Net book value refers to the accounting value of an asset recorded on a company's balance sheet. It is calculated by subtracting the accumulated depreciation from the original cost or purchase price of the asset. The net book value represents the remaining value of the asset as of the balance sheet date.
Why does it matter
For a banker, understanding the net book value of assets is crucial in assessing a company's financial health and collateral position. It provides insights into the actual value of assets after accounting for their wear and tear (depreciation). The net book value is a tool in determining the value of assets that can be used as collateral for loans.
Other Relevant Terms
- Capital
- Collateral
- Depreciation
- Return to Terminology Library
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