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Resources for Sound Business Decisions.™

List of Common Measures of Value

Book Value is the difference between a company’s Assets and Liabilities as stated on the current Balance Sheet. Book Value is an accounting term and does not provide a meaningful measure of the business value.

Liquidation Value is the net amount that would be realized if the business terminated and the assets are sold piecemeal. Liquidation can be “forced” or “orderly.”

Collateral Value is the amount of available secured credit based on the percentage that can be advanced against the estimated, appraised value of individual assets.

Insurable Value is the value used to determine the amount of insurance coverage that should be carried to fund buy-sell agreements or for liability, property and casualty insurance purposes.

Market Value is the price a business would command in an open market when exposed for sale for a reasonable period of time.

Fair Value for financial reporting is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For state legal matters pertaining to shareholders, Fair Value is generally defined by statute.

Fair Market Value is the price, expressed in terms of cash or equivalents, at which a business would be sold between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both parties have reasonable knowledge of the relevant facts.

Impaired Goodwill Value is a reduction in the value of Goodwill arising from annual valuations necessitated by FASB No. 142.

Fundamental or Intrinsic Value is the value that an investor considers, on the basis of an evaluation of available facts, to be the “true” or “real” value that will become the market value when other investors reach the same conclusion.

Investment Value is the value to a particular investor based on individual investment requirements and expectations.

Break-Up Value is the total value of a company’s separate operations (divisions, subsidiaries or business units) if they were sold separately on the open market.