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Discussion Starter #1
Hello,
From what I can tell book value does not include long term debt.
Why not?
My thinking is that it including long term debt as part of the book value give the shareholder a more accurate "book value" and a more realistic estimate of what he may receive should the company go under?
 

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What is the context of your question? When buying common shares or units of a mutual fund, "book value" is the price you paid for the shares or units. Over time it is the weighted average of your purchase costs, usually equivalent to ACB.

However, in the context of a company's financial statements "Book Value" is Net asset Value or Net Asset Value per Share, which does take into consideration any liabilities the company has.

See http://financial-dictionary.thefreedictionary.com/Net+Asset+Value+Per+Share

net asset value per share (NAV)
A valuation of an investment company's shares calculated by subtracting any liabilities from the market value of the firm's assets and dividing the difference by the number of shares outstanding. This factor illustrates the amount a shareholder would receive for each share owned if the fund sold all its assets (stocks, bonds, and so forth) at their current market value, paid off any outstanding debts with the proceeds, and then distributed the remainder to the stockholders. In general, net asset value per share is the price an investor would receive when selling a fund's shares back to the fund. Net asset value per share is similar in concept to book value per share for other types of firms.
 

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OGG, he is asking about individual companies.

Franky, why do you think book value does not include long term debt? Of course it does. Ford's book value is -$2.35. Surely that is not short term debt.
 

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Discussion Starter #4
Franky said:
well here is my information,
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=f&lstStatement=10YearSummary&stmtView=Ann

this link shows the 10 year summary and it has a column for current liabilities and a separate column for long term debt.
So according to that Ford has current assets of 194850 and liabilities of 202670, so assets minus liabilities divided by 3.3B outstanding shares = -2.36 This is the " book value ".
But what I am asking is why doesn't that include long term debt because ford has an additional 132441 in long term debt which would bring the figure to -42.50 which hardly even makes sense but it is what it works out to. I have been reading the intelligent investor book and the above -42.50 figure I think is what ben graham would call " net working capital ".

If long term debt is an addition then the "book value" as usually listed wouldn't really be the amount a shareholder could hope to receive if that stock went bankrupt.
Does this help expand my question?
 

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Gazing at the 2009 annual report, $32B of the automotive section debt and $83B of the financial section debt is long term debt (p127). The short term debt is about $18B. They total ~132B and are part of the ~204B total liabilities (p77).
 
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