|
||
| Book Value |
Book Value is the net value of an organization. You can calculate a firm's book value by examining its balance sheet and subtracting its liabilities from its assets. The term "Book Value" is interchangeable with "shareholder's equity." It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated today.
|
|
Although Book Value is most simply stated as assets minus liabilities, it is by no means a precise measure of value. Accounting methods can assume that assets have a current value that may be unrealistic in the marketplace. 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 organization would therefore be understated.
|
|
