How Do You Calculate Intrisic Value Of A Company? What Is The Difference Between Intrinsic Value And Book Value?
In simple terms, book value is based on the value of total assets less the value of total liabilities – it attempts to measure the net assets a company has built up until the present time. In theory, this is the amount that the shareholders would receive if the company were to be completely liquidated. For example, if a company has Rs 23.2 billion in assets and Rs19.3 billion in liabilities, the book value of the company would be the difference of Rs 3.9 billion (book value). To express this number in terms of book value per share, simply take the book value and divide it by the number of outstanding shares. If a given company is currently trading below its book value, it is often considered to be undervalued. There are, however, several problems that arise with the use of book value as a measure of value. For example, it would be unlikely that the value the company would receive in liquidation would be equal to the book value per share. Nevertheless, it can still be used as a useful b
