Book value of the Firm

CFA Level II
#1

If Firm A has Book value = $2/share. while the market price per share is $5 per share.

still confused about the concept of Book value. is it BV=$2 here refer to the par value of the stock , I mean just look at the Equity part of the balance sheet or BV refers to the total assets divided by the number of share outstanding.

thanks

#2

It’s neither. BV is what the company is worth if you sell all its assets and pay all its debts. It’s the stockholder’s equity divided by total shares…common shares only.

#3

stockholder’s equity here refers to book value or market value?

thanks

#4

S.Equity = Book Value

#5

Book value…market value is opinion. BV is fact.

#6

So, Stockhoder equity = Retained earning + Additional pay in capital + par x #shares + other comprehensive income

you mean all of these equal to Book value of the company? which equal to total assets - liability?

I don’t they are equal. if you look at the assets and liability , assets can includes the intangible assets like goodwill

thanks

#7

trust me passcfaforsure, that is BV.