How to obtain book value of a company

Please tell me how to obtain book value of a company where there are abundant reserves and surplus in a private limited company

Also how would finding book value be obtained for a holding company where there is a subsidiary company with accumulated losses
Asked 8 months ago in Audit from Kolkata, West Bengal
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

B S Sridhar
CA, Chennai
43 Answers
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  Talk to B S Sridhar
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.
Vidya Jain
CA, Kolkata
420 Answers
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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? 
Vidya Jain
CA, Kolkata
420 Answers
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Hello Sir,

In order to calculate Book Value we shall need to go through the Audited Balance Sheet of the Company.
Rohit R Sharma
CA, Mumbai
1900 Answers
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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
Abhishek Dugar
CA, Mumbai
2201 Answers
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