Book value. The book value of a stock is based on the net profits or deficit of the corporation
which issued it. It is a frequent practise in quoting bank stocks to give book values as well as
market prices. Illustration: If a bank has net profits (accumulated surplus and undivided profits)
equal to 75 per cent on the stock then the book value of the stock is the original amount of the
stock, 100 per cent, plus the equivalent in net profits, 75 per cent, or altogether 175. On the other
hand, if the bank shows no net profits, but instead shows a deficiency equal to, say, 5 per cent on
the stock the book value of the stock is only 95. The book value of the stock of a railroad or
manufacturing company is ascertained in the same manner as the book value of the stock of a
bank.
which issued it. It is a frequent practise in quoting bank stocks to give book values as well as
market prices. Illustration: If a bank has net profits (accumulated surplus and undivided profits)
equal to 75 per cent on the stock then the book value of the stock is the original amount of the
stock, 100 per cent, plus the equivalent in net profits, 75 per cent, or altogether 175. On the other
hand, if the bank shows no net profits, but instead shows a deficiency equal to, say, 5 per cent on
the stock the book value of the stock is only 95. The book value of the stock of a railroad or
manufacturing company is ascertained in the same manner as the book value of the stock of a
bank.
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