RE:Book ValueBook value does not equal liquidation value most of the time. Book value just represents the initial investment in the company plus the cumulative net earnings over the years, minus dividends. If assets aren’t fairly valued at market prices every quarter, then book value is usually irrelevant, but excellent as a backstop for calculating the return performance of the business (i.e. ROE).
The job of the analyst is to analyze the assets and liabilities, mostly independently of their value on the balance sheet. You must be independent because balance sheets have a lot of cashless activity like depreciation and spits of goodwill and intangibles that are a result of business acquisitions. A lot of assets that grow in value get depreciated. A lot of value isn’t recognized in the balance sheet. The perfect example is Pearson. That building wasn’t included in the earnings yet, but the cash value is worth 18-19 cents a share in book value that should get realized in the next quarter or two.
The assets and liabilities on CIBT’s balance sheet include the complete assets within each joint venture for each of the buildings. CIBT has a limited ownership of each of those assets (20-40%). I believe they report on the equity (book value) attributed to cibt shareholders separelty. They report the earning attributable to shareholders separately. So you effectively have to net out the equity of the minority interests from the joint venture partners to get the real book value for shareholders.