5.1.1
- Book value
Book value is an accounting concept. It is
simply the amount that the company's assets (net of
depreciation, depletion and amortization) and total
liabilities -- as carried on the company's balance sheet.
(Sometimes book value is referred to as net book
value, net worth or shareholders'
equity.) This balance sheet figure does not measure
the firm's earnings potential and often diverges from
the market value of its net assets. (More
5.1.1>>)
5.1.2 - Adjusted book value
Sometimes the assets stated on the company's balance
sheet can be adjusted to reflected fair market value
-- that is, either their replacement value or their
salvage value. This method of valuation may be appropriate
for asset-intensive businesses with little value from
goodwill or other intangible factors, not-for-profit
organizations, or businesses to be purchased by a competitor
in the same industry. (More 5.1.2>>)
5.1.3 - Liquidation (or salvage)
value
Liquidation value is the amount that would be received
if the company actually sold all of its assets,
for their market value, and paid all its liabilities
(including preferred stock). The remaining money, if
distributed to shareholders, represents the firm's liquidation
value per share. (More 5.1.3>>)
5.1.4 - Industry standard ratios
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Chapter 5 - Business Valuation
