Residual income formula

stephaniez · June 1, 2011, 4:14am

Book value of equity refers to common shareholder’s equity or total shareholder’s equity?

Chuckrox8 · June 1, 2011, 4:15am

Total. Assets - Liabilities = BV (Total Equity)

stephaniez · June 1, 2011, 4:17am

thanks

Damil4real · June 1, 2011, 4:17am

Book value of equity = Total Shareholder’s Equity - Preferred Shares / Outstanding Shares.

stephaniez · June 1, 2011, 4:25am

so it’s actually Book value of common equity, right?

Chuckrox8 · June 1, 2011, 4:45am

Yea, that’s the technical name. The common stock balance sheet line item you referenced earlier is the historical equity issuance. It’s the amount of equity the company has created by selling shares to the public.