Graham's Book Value?
Can someone explain this?
According to investopedia Book value = Total assets less Total liabilities less intangibles.
Bu then Graham refers to the book value as effectively shareholder's equity. Same here: http://www.accountingcoach.com/stockholders-equity/explanation/8
Thus the difference between the two approaches are subtracted intangibles. So which one is correct?
Assets = Liabilities + Shareholder's Equity
Depends how you define intangibles in your calc. If you are talking about goodwill, then subtracting it from (assets - liabilities) will give you net tangible book value. That can be likened to liquidation value or assets that can be separated and sold.
equity value is just net asset value (showing the residual value of the business).
So both definitions are technically correct - just depends on what you're using them for.
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