How to obtain book value of a company

Dear Sir

You have not specified the purpose for which Book value is required.

prima facie, the following are the methods :-

Method 1 - Straight forward method :-

NAV = A / B

Where A means

Share Capital + Reserves & surplus + Other share holders funds - Accumulated losses - Prel/deferred reveune expenses

B means = No of shares of the Company.

Method 2 :- Discounted future cash flows method

You need to arrive at the future cash flows for the company for the next X years and discount the same to current value by applying Discount factor and arriving at the value

Thanks & regards

- Sridhar

sridharca@gmail.com

Book value can be found out by

1) Assets less liabilities (Excluding capital balance and free reserve less ficticious assets )

or

2) Capital balance add free reserve less ficticious assets

If the compnay has negative EPS, then the shares can be transferred at face value.

Fictitious assets are those assets which are not going to render any benefit In future. For example debit balance of profit and loss A/C, preliminary expenses etc.

For book value of holding company do you have consolidated balance sheet?

Hello Sir,

In order to calculate Book Value we shall need to go through the Audited Balance Sheet of the Company.

There are many ways by which book value can be calculated. In essence book value is equity capital plus free reserves.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com