Modified Book Value

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DEFINITION

An asset-based method of determining how much a business is worth by adjusting the value of its assets and liabilities according to their fair market value. This technique also includes the value of all of the business's intangible assets and liabilities, such as goodwill and pending litigation.


INVESTOPEDIA EXPLAINS

Liquidation value and replacement value are two other asset-based valuation methods. Businesses are also commonly valued using market multiple methods, capitalization rates, excess earnings or discounted cash flow. Companies that specialize in business valuation can be hired to determine a business's value for a number of purposes, including a merger or acquisition, shareholder transaction, estate planning and financial reporting.


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