Book Values and Shares


A fourth key number is book value. Earlier, we used this term to describe the purchase price less depreciation of a noncurrent asset. When applied to a whole company, book value means equity. It’s right on the balance sheet. It’s the company’s worth from a formal accounting perspective.

Equity is assets minus liabilities. But sometimes, the balance sheet has an equity line that’s smaller than assets minus liabilities. This came up with LinkedIn. Its China subsidiary had a minority partner. The partner owned a piece of the business that a LinkedIn public shareholder wouldn’t. This piece appeared in the equity ...

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