Book Value Vs Enterprise Value

In this article we will discuss book value vs fair value in detail and indicate their key distinctions.

Book value vs enterprise value. What is book value. Essentially book value is the original cost of an asset minus any depreciation depreciation expense depreciation expense is used to reduce the value of plant property and equipment to match its use and wear. 241 billion in assets less 168 billion in liabilities equals 72 billion in owners equity.

National beverage book value per share vs enterprise value relationship and correlation analysis over time. Another way to say that is if the balance sheet were perfect the book value of a company would equal its market value. They are very different because one is the book value and one is the market value.

By paulina likos staff writer sept. Determining the book value of a company is more difficult than finding its market value but it can also be far more rewarding. Book value is the value of a company to its equity shareholders.

In the case of microsoft for example the company s book value on june 30th 2017 was 72 billion. How to calculate equity value and enterprise value answer tricky interview questions and more. Enterprise value is a better metric for assessing mergers and acquisitions that market capitalisation which excludes debt and cash.

Enterprise value vs equity value explained. Market equity value which is the total number of shares multiplied by market share price and the book equity which is the value of assets minus liabilities. Whereas enterprise value is the total value of equity plus debt minus the total amount of cash the company has this roughly gives an idea about total obligation a company has.

Hence it is also known as shareholders equity or net worth. Book value indicates an asset s value that is recognized on the balance sheet. The key differences both of these metrics can be used independently and together when valuing a company s stock.