7. The relationship between the book value of shareholders' equity and the firm's Market Value Added (MVA) and Economic Value Added (EVA) Yesterday, Galaxy Corp, released its 2015 annual report on the company's website. While reading the report for his boss, Asher came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Tessa, for help. ASHER: Tesse, do you have a second to help me with my reading of Galaxy's annual report? I've come across several unfamiliar terms, and I want to make sure that I'm interpreting the data and management's comments correctly. For example, one of the footnotes to the financial statements uses the book value of Galaxy's shares," and then in another place, it uses Economic Value Added." I've never encountered those terms before. Do you know what they're talking about? TESSA: Yes, I do. Let's see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the asset's adjusted for any accumulated depreciation or amortization expense. The value, of cost and its accumulated depreciation market value or replacement cost expense, is called its book value. In contrast, when the term refers to the entire company historical value or original purchase price as reported in the firm's ASHER: That makes sense. So, what makes this value important to investors is that it is value that can change-but only due to a couple of events, including the of Treasury stock, the sale of new common or preferred shares, and the payment of Equally important, it change in response to changes in the market prices of the firm's shares TESSA: Right So, how useful would a firm's book value be for assessing the performance of Galaxy's management? COD COO FE $ 4 A 11 G % 5 6 & 7 8 8 9 ) 0 E R del 7. The relationship between the book value of shareholders' equity and the firm's Market Value Added (MVA) and Economic Value Adde (EVA) Yesterday, Galaxy Corp. released its 2015 annual report on the company's website. While reading the report for his boss, Asher came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Tessa, for help. ASHER: Tessa, do you have a second to help me with my reading of Galaxy's annual report? I've come across several unfamiliar terms, and I want to make sure that I'm interpreting the data and management's comments correctly. For example, one of the footnotes to the financial statements uses "the book value of Galaxy's shares, and then in another place, it uses 'Economic Value Added. I've never encountered those terms before. Do you know what they're talking about? TESSA: Yes, I do. Let's see if we can make these terms make sense by talking through their meaning and their significance to investors. The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the asset's adjusted for any accumulated depreciation or amortization expense. The value or difference between the machine's historical cost and its accumulated depreciation expense, is called its book value gross In contrast, when the term refers to the out it means the total value of the company's as reported In the firm's net ASHER: That makes sense. So, what makes this value important to investors is that it is value that can change-but only due to a couple of events, including the of Treasury stock, the sale of new common or preferred shares, and the payment of Equally important change in response to changes in the market prices of the firm's shares. TESSA: Right So, how useful would aim's book value be for assessing the performance of Galaxy's management? A the relationship between the book value of shareholders' equity and the firm's Market Value Added (MVA) and Economic Value WA) terday, Galaxy Corp. released its 2015 annual report on the company's website. While reading the report for his boss, Asher came across seves me about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Tessa, for help ASHER: Tessa, do you have a second to help me with my reading of Galey's annual report? I've come across several unfamiliar terms, and I want to make sure that I'm interpreting the data and management's comments correctly. For comple, one of the footnotes to the financial statements uses the book value of Galaxy's shares," and then in another place, it uses Economic Value Added." I've never encountered these terms before. Do you know what they're talking about? TESSA: Yes, 1 do's see we can make these terms make sense by talking through their meaning and their significance to investors The term book value has several use. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the se's adjusted for any accumulated Depreciation or amortition expense. The value or difference between the machine's historical cost and its accumulated depreciation expenses Called its book al In contrast, when the term refers to the entire company. It means the total value of the company's as reported in the firm's ASMERT income statement make this value important to investors is that value that can change-out only due to Dance sheet in the of Treasury shock, the sale of new common or preferred shares, and the payment of changes to changes in the market prices of the firm's shares TISSA Show wodoo before in the performance of Galaxy's management 4 Gae 6 & 7 8 9 0 R T T Y U O P F G H J L V B N M