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Showing posts from September, 2017

Fundamental analysis: Significance of book value in stock picking

Book Value is a valuation metric used to value an enterprise. It is the value of all the assets (current and non current) arrived at by deducting all the current and non current liabilities, depreciation, amortization and also the intangible assets (patents, goodwill etc.). Calculating the book value gives you the approximate value of the company if it were to get liquidated without considering the earnings of the enterprise. WHAT KIND OF COMPANIES CAN BE VALUED USING BOOK VALUE The valuation metric of book value is helpful in analyzing certain type of companies.This metric is often ignored and only gets a passing reference compared to other valuation metrics so we are going to discuss it in detail. Book value holds all the more significance when valuing Asset rich companies, Banks and Financial Companies. An example of asset rich company would be mining companies .These companies own mines and the ores available within the mine but it takes years before al