• 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 1 year 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
18 Consultations

5.0 on 5.0

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
639 Answers
15 Consultations

4.8 on 5.0

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
639 Answers
15 Consultations

4.8 on 5.0

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
2104 Answers
91 Consultations

5.0 on 5.0

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
3576 Answers
162 Consultations

5.0 on 5.0

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