Is a company's "net worth" the same as its book value?
Answers
279 points
thinker70 answered one month ago …
NOT EXACTLY, there is the price that the market establishes as per its stock price and shares outstanding, what an entreprenuer might be willing to pay for the whole company, usually a premium if it is doing well, or discount if it is in financial trouble and is desperate for a cash infusion.
A third possibility is breakup of the company into its various components that MAY release hidden value like real estate carried on its books at prices paid decades ago etc.
102 points
MM199691 answered one month ago …
Net Worth is equal to Total Assets minus Total Liabilities.
Book Value is equal to Total Assets minus (Total Liabilities, Preferred Stock and Intangible Assets such as Goodwill).
So, Book Value is equal to Net Worth minus Preferred Stock and Intangible Assets. This is what the company would have left over in assets if it went out of business immediately.
Neither of these values have anything to do with market capitalization (number of shares outstanding times price per share) or the price somebody might be willing to pay to control the whole company.
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