Sample Thesis Paper

The calculation of the book value can vary from one company to another. One of the most common calculations of the book value is the tangible book value. The tangible book value is the traditional book value and it is the book value referred to be analysts and investors when they refer to book value. As the term indicates the tangible book value uses only the tangible assets of a company in the calculations (Copeland et al. 2000).

The tangible assets of a company include all the fixed assets and the financial assets whose values can be objectively estimated. In most cases the tangible book value includes the assets reflected in the balance sheets. The tangible book value is a superior form of book value because of the reliability of its estimates. The value of tangible assets can be determined with certainty since records exist of their acquisitions costs and all the changes that have occurred over time (Barth and Clinch, 1998). However the tangible book value may lose its relevance due to inaccuracies in the calculations of the values of assets. Accounting theory maintains the use of historical cost which is deemed to be a poor estimation of the values of the assets. A modification of the tangible book value involves the calculation of the fair prices of all the tangible assets.

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