What is the value of original value minus mean value?
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would love to know what persepective you are coming from on this question because as I tell the class every day, every angle of a puzzle has a different view.
So if you are from Accounting, here’s the textbook answer:
Negative Tangible Book Value means that the assets are all intangible and outweigh the tangible assets. For example, this means that you have more goodwill, brand power, or paid a premium for the business at acquisition over and above the book value of the tangible assets. And therefore than you less stuff, assets, equipment, building, inventory, cash to borrow against to generate cash flow.
Great, OK accounting homework done now. Let’s talk about the Finance Answer
Negative Tangible Book Value means the same thing, however, our whole financial world is one big intangible right now. What exactly does Amazon make? How about Facebook. So yeah, if you are in a start-up situation, this may not be the only number you consider. You have to do the entire write-up and look at all aspects.
One of the things that I would look at is sustainability. The accounting community is working on this.
So if you are from Accounting, here’s the textbook answer:
Negative Tangible Book Value means that the assets are all intangible and outweigh the tangible assets. For example, this means that you have more goodwill, brand power, or paid a premium for the business at acquisition over and above the book value of the tangible assets. And therefore than you less stuff, assets, equipment, building, inventory, cash to borrow against to generate cash flow.
Great, OK accounting homework done now. Let’s talk about the Finance Answer
Negative Tangible Book Value means the same thing, however, our whole financial world is one big intangible right now. What exactly does Amazon make? How about Facebook. So yeah, if you are in a start-up situation, this may not be the only number you consider. You have to do the entire write-up and look at all aspects.
One of the things that I would look at is sustainability. The accounting community is working on this.
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