How useful a firms book value be for assessing performance

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MIA: Yes, I do. Let's see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the asset's , adjusted for any accumulated depreciation or amortization expense. The value, or difference between the machine's historical cost and its accumulated depreciation expense, is called its book value. In contrast, when the term refers to the entire company, it means the total value of the company's as reported in the firm's . JOSH: That makes sense. So, what makes this value important to investors is that it is value that can change-but only due to a couple of events, including the of Treasury stock, the sale of new common or preferred shares, and the payment of Equally important, it change in response to changes in the market prices of the firm's shares. Get the instant assignment help. MIA: Right! So, how useful would a firm's book value be for assessing the performance of Extensive's management?

Reference no: EM133919896

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