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متابعة

Is book value the best 'proxy' to the value of Equity Shares?

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تم إضافة السؤال من قبل VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
تاريخ النشر: 2014/10/01
Kamran Anjum
من قبل Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

Its a debatable matter. For companies which does not have readily available market value i.e. pvt. companies we can accept the above statement in affirmative. But for companies that have their market value of equity available this statement is wrong.

Similarly in situations of NPV or Freecash flow analysis where we need market value of equity to calculate the discount rate preference is given to market values. However if market values are not available then we can use book value as alternative.

Tamer El-Beshbishy
من قبل Tamer El-Beshbishy , Finance Manager and Consultant , AlKhayl

A book value is usually all the time away from the market value of shares. this could not be one of the best methods of the evaluations. this could be applied on all other fixed asets also because some of them has the same criteria 

Khaled Abdelrehim ACCA DipIFR CMA
من قبل Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

Mostly no, we will figure out this if we liquidated the company and compared the net proceeds with the owners equity book value.

RAMAN NAMPOOTHIRI
من قبل RAMAN NAMPOOTHIRI , Dubai, UAE as Audit Manager , Paul & Hassan Chartered Accountants

No. Book value is at best an estimate, an estimate of what equity holders tangibly own in a company.  In theory if a company were to pay off all liabilities and distribute the remaining assets investors would receive book value.  In reality this never happens, and when it does it's a messy affair, at times what's distributed is far in excess of book value, and other times far below.

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