again, coming from the Schweser book 2, exam 3 morning vignette, this time question 40. Book Value is calculated as: (total assets adjusted by all the evil stuff to do with operating leases, R&D, etc.) MINUS (current liabilities + long term debt adjusted by more evil stuff) Why don’t accounts payable & accrued expenses, both part of the Liabilities section of the balance sheet, reduce the Book Value? Intuitively, it seems like the Book Value should be the Book Value of EQUITY (Assets-Liabilities), adjusted for whatever evil accounting tricks were left off the books.
forget scwchere! just know BV = (TA - TL) - any claims senior to common (i.e. preferred)
agree - you have the basic concept correct - BV is BV of equity.
ugh… the trouble I have with Schweser is that their late practice exams are so screwed up that they make me panic in the 11th hour… and all their “Test Management” questions seem a little too easy compared with what the actual test is likely to be like. Tough to know how to spend my last free day preparing.