Book Value Vs Enterprise Value

They are very different because one is the book value and one is the market value.

Book value vs enterprise value. That was computed as shown here. Hence it is also known as shareholders equity or net worth. Book value is the value of a company to its equity shareholders.

Book value indicates an asset s value that is recognized on the balance sheet. Another way to say that is if the balance sheet were perfect the book value of a company would equal its market value. The key differences both of these metrics can be used independently and together when valuing a company s stock.

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. In the case of microsoft for example the company s book value on june 30th 2017 was 72 billion. Enterprise value is a better metric for assessing mergers and acquisitions that market capitalisation which excludes debt and cash.

In this article we will discuss book value vs fair value in detail and indicate their key distinctions. Equity value of the company is of two types. 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.

How to calculate equity value and enterprise value answer tricky interview questions and more. Enterprise value vs equity value explained. Join 307 012 monthly readers.

Enterprise value and equity value are two common ways that a business may be valued in a merger or acquisition both may be used in the valuation or. 241 billion in assets less 168 billion in liabilities equals 72 billion in owners equity. By paulina likos staff writer sept.