7. The relationship between the book value of shareholders" equity and the Value Added (MVA) and Economic Value Added (EVA) Yesterday, Westam Gas & Blectric Co. released its 2015 annual report on the company's website. While reading the report for his boss, Tristan came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Annie, for help. Tristan Annie, do you have a second to help me with my reading of Westen G&E'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 Western GRE'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? Annie 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 equipment, book value refers to the djusted for any accumulated depreciation or amortization expense. The and its accumulated depreciation expense, is called its book value. value, or difference between the machine's historical cost 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 t to is that it is 7. The relationship between the book value of shareholders" equity and the Value Added (MVA) and Economic Value Added (EVA) Yesterday, Westam Gas & Blectric Co. released its 2015 annual report on the company's website. While reading the report for his boss, Tristan came across several terms about which he was unsure. He leaned around the wall of his cubicle and asked his colleague, Annie, for help. Tristan Annie, do you have a second to help me with my reading of Westen G&E'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 Western GRE'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? Annie 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 equipment, book value refers to the djusted for any accumulated depreciation or amortization expense. The and its accumulated depreciation expense, is called its book value. value, or difference between the machine's historical cost 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 t to is that it is
