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Author: dsstao Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3794  
Subject: Book Value & Bondholders Date: 8/28/2011 6:56 PM
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Hi All,

If a company has a book value of $1 billion, and $500 million in debt, would shareholders receive $1 billion upon liquidation, or only $500 million?

The core question is - is debt accounted for in a company's book value?

Thanks,
Dave
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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3776 of 3794
Subject: Re: Book Value & Bondholders Date: 8/28/2011 11:14 PM
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Dave,

The book answer is here

http://www.investopedia.com/terms/b/bookvalue.asp

jack

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Author: StuyvesantGrad70 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3777 of 3794
Subject: Re: Book Value & Bondholders Date: 9/6/2011 10:32 PM
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The core question is - is debt accounted for in a company's book value?
Yes. Book Value (or Shareholders Equity) is Assets - Liabilities.

If a company has a book value of $1 billion, and $500 million in debt, would shareholders receive $1 billion upon liquidation, or only $500 million?
In theory, $1 billion. In reality, the current market value of the assets less liabilities may be more or less than book value. Liquidations can be distress sales and assets such as inventory and equipment may have to be sold at below market values. Real estate assets may be carried at the price paid years ago, but may have appreciated since then.

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