Question

Baldwin's balance sheet has $86,543,000 in equity. next year they expect assets to increase by $4,000,000 and liabilities to decrease by $2,000,000. if that happens, what will be baldwin's book value?

Answer 1

The book value is calculated by Equity + Assets - Liabilities, which pretty much give a rough valuation for the company if it got liquidated

In this case, Baldwin's book value would become:

$86,543,000 + $ 4,000,000  + $ 2,000,000 (it's possitive because the liability is decreasing)

= $ 92,543,000