Book Value

Book value is a loosely used generic term referring to the accounting value of a business or operation. It is generally referred to as the net balance sheet value on a given date. This means assets less liabilities and less intangibles. Other variations of book value include carrying value, basis, and tangible book value.

Value Investing

Value Investing

Value investing is a concept of buying and selling stocks based on business fundamentals and not as a reaction to news or market trends.   It is a well accepted principle that often the market overreacts to news causing stocks to plummet in price or escalate in value.   Value investors ignore this and use sound business fundamentals to trade stock.   Much of historical wealth accumulation is based in value investments.   There are no short-cuts or sudden actions taken by value investors.  All decisions are derived by business analytics and trendlines.

EBITDA – Drawbacks

EBITDA

There are several business financial attributes required for EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to work well as a basis for the multiple of earnings method (the method used with the Market Comparable Valuation Approach); see Fair Market Value  for a better understanding of the three primary business valuation approaches.

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