Definitions and Formulas and Stock Screening Paremters

**hawkhawk** Mon Oct 09, 2006 7:55 pm

Definitions and Formulas and Stock Screening Paremters
Someone please help me define and understand what the formula is for the following. When you reply please state the definition even if it is the same definition for many, right next to the word. Also include the formula and screening paremeter

Asset Value:
Asset Value Formula:
Screening Parameter using online stock screens:

Net Asset Value:
Net Asset Value Formula:
Screening Parameter using online stock screens:

Net Current Asset Value:
Net Current Asset Value Formula:
Screening Parameter using online stock screens:

Working capital:
Working capital formula:
Screening Parameter using online stock screens:

Net Working Capital:
Net Working Capital formula:
Screening Parameter using online stock screens:

Tangible Asset Value:
Tangible Asset Value formula:
Screening Parameter using online stock screens:

Net tangible asset value:
Net tangible asset value formula:
Screening paremeter using online stock screens:

Book Value:
Book Value formula:
Screening Parameter using online stock screens:

Tangible Book value:
Tangible Book value formula:
Screening Parameter using online stock screens:

Net quick liquidation value:
Net quick liquidation value formula:
Screening Parameter using online stock screens:

Balance Sheet Value:
Balance Sheet Value formula:
Screening Parameter using online stock screens:

Whoever can answer each one of those exactly beside each question is a genius. It would really help me and a lot of newbies out. Between Ben Graham and Jason Sweig using most of these terms interchangably I am going to lose my mind. Why can't people use one term throughout the entire book? Anyways please please please help.

**blast_investor** Mon Oct 09, 2006 11:57 pm

Re: Definitions and Formulas and Stock Screening Paremters
Hi hawkhawk:

There terms are financial accounting term, you usually can find the definition from google search:

http://www.google.com/

For example, type in "working capital" under google, you get several links on the definition of this term.

The problem is, the explanation of these terms requires some basic knowledge of accounting, understand what is "asset", what is "liability" in balance sheet. If you have difficulty in understanding the explanation, then you will need to study a beginning book on finance and accounting.

hawkhawk wrote: Whoever can answer each one of those exactly beside each question is a genius. It would really help me and a lot of newbies out. Between Ben Graham and Jason Sweig using most of these terms interchangably I am going to lose my mind. Why can't people use one term throughout the entire book? Anyways please please please help.

**hawkhawk** Tue Oct 10, 2006 6:39 am

Reply to Mr.Lu on Definitions, Formulas
Hello Mr. Lu,

I agree with you a 100%. I am a 3rd year University Finance major and I have an understanding of accounting and Finance. I also manage a portfolio of stocks, bonds and other securities for my University. The problem I am having is that these terms are thrown around interschangeably and do not always mean the same thing. For example what Ben Graham calls working capital and what really is working capital are two different things. That is why I wanted some help with specifics on these terms.

I have already google searched and Ben Graham's terms and actual terms are not always the same. Even still Ben Graham scholars do not co ordinate their terms in unison.

I understand there is a lot of work in the reply Mr. Lu and I appreciated you taking the time at least to reply to my e-mail. I guess I am going to need to get Security Analysis, and Janet Lowe books to better answer my question.

Regards,

hawkhawk

**hawkhawk** Tue Oct 10, 2006 8:26 am

Reply to definitions, Formulas
Hello again Mr. Lu,

I have gathered up some of my examples to show you what I mean.

Here is one of the formulas given:
Net Current Asset value (NCAV)

Current assets minus total Liabilities + preferred stock
# of shares outstanding

Another formula given:

Net Current Asset (NCA)

Current assets minus total libilities

Now the first one is called Net Current Asset Value (NCAV) and in the book it says the answer is called your book value. The second formula is only Net Current Asset.
The first NCAV formula includes preferred stock and is divided by the shares outstanding. The second is not on a per share basis and does not include preferred shares.

Using an example for the first formula NCAV:
Let's say:
Current assets = 3 000 000
Total libilities = 1 567 345
preferred stock = 0
Shares outstanding = 2 000 000
Share price = $ 3.00

current assets minus total libilities + preferred shares
#of shares outstanding

= 3 000 000 - 1 567 345 + 0
2 000 000
= $0.72

2/3 of $0.72 is $0.48
So am I looking to only buy the share if it is selling for $0.48?

Example #2 using second formula for Net Current Assets (NCA)

current assets - total liabilities
3 000 000 - 1 567 345 = $1 432 655

2/3 of $1 432 655 = $955 103
if my share price is $3.00 that is much much lower than 2/3 of the NCA amt of $955 103

I know I am missing something easy so please be gentle.

So is Net Current Asset Value (NCAV) and Net Current Assets (NCA) the same thing? Furthermore, Is Net Working capital the same as NCAV or the same as NCA?

Next lets talk about Net Asset Value (NAV)
Here is one formula:

Total assets-total liablitites-stock issues ahead of common stock
# of shares outstanding

Another formula:
NAV= total assets - total liabilities

Also, in the book Graham says that Tangible asset Value (TAV) is the same as Net Asset Value (NAV)
yet the formula he gives for Tangible asset value (TAV) is:

Total value of a company's physical and financial assets - total liabilities

Furthermore he has that Tangible asset value and Net asset value's formula is:

Total shareholder's equity - intangibles- total liabilities
#of shares outstanding

And he says these are all the same as Book Value.

What am I missing? Please help. I am just getting confused because there is no unison among terms. I am a simple man and like to make sure I am doing this right before I start picking stocks.

Please help

Regards,

hawkhawk[/b]

**blast_investor** Tue Oct 10, 2006 5:05 pm

Re: Reply to definitions, Formulas
Hi hawkhawk:

NCAV and NCA are same term. You would have to compare this value under per share basis , or under market cap basis.

Market Cap basis:
NCAV = (Current asset - Total Liability - Preferred Stock);
Compare above NCAV number to market cap of a stock. You can look up the market cap from Yahoo finance.

Market Cap = Stock Price multiply by total number of common shares.

Per share basis:
NCAV per share = (Current asset - Total Liability - Preferred Stock)/Total number of common shares.

Compare above NCAV per share to stock price per share.

Preferred stock value is treated like debt in the above analysis.

hawkhawk wrote: Hello again Mr. Lu,

I have gathered up some of my examples to show you what I mean.

Here is one of the formulas given:
Net Current Asset value (NCAV)

Current assets minus total Liabilities + preferred stock
# of shares outstanding

Another formula given:

Net Current Asset (NCA)

Current assets minus total libilities

**blast_investor** Tue Oct 10, 2006 5:09 pm

Net Asset Value is not a standard term. Different situation has different meaning.

Tangible asset = Asset excluding intangible or goodwill.

Tangible means physical. Stuff that human eye can not see and touch is called intangible. In balance sheet, typical company record intangible asset as "goodwill". Remove goodwill, you get tangible asset values.

**hawkhawk** Wed Oct 11, 2006 8:56 pm

Hello Mr. Lu
This is where all my confusion came from

Pg. 9
Quote: One of our chief requirements here that our readers limit themselves to issues selling not far above their tangible asset value.

What is tangible asset value?

According to Jason Zeig’s footnotes on pg 198:

Net asset value, book value, balance-sheet value, and tangible asset value
Are all synonyms for net worth:

He calculates net worth as:
Net Worth: total value of a company’s physical and financial assets – total liabilities

Here he gets confusing. He goes on to say:

You calculate it from the balance sheet
shareholder’s equity – all intangible assets
# of fully diluted shares outstanding

What this tells me is:

1.)Net asset value = total value of a company’s physical and financial assets – total liabilities

And

2.)Net asset value =
shareholder’s equity – all intangible assets
# of fully diluted shares outstanding

So which is it? The first calculation will not give you the same calculation as the second!

And if Net asset value, book value, balance sheet value, and tangible asset value are all synonyms for net worth then they all have 2 formulas according to Zeig that will not give you the same answer.

Sorry to pester you about this Mr. Lu but it is just bugging me. haha

**hawkhawk** Thu Oct 12, 2006 7:08 pm

Solved the problem. Hope this helps new people
This whole problem for me was how I was interpreting what shareholder's equity was. I was thinking of the Shareholder's equity of a balance sheet and completly forgetting that

asset - liabilities = shareholder's equity (or Owner's equity)

So here is the clarification:

Net asset value, book value, balance sheet value,tangible asset value

all synonyms for Net worth

Net Worth: Total assets - total liabilities = Shareholder's equity

then take that shareholder's equity # and - soft asset (goodwill, trademarks, other intangibles) and divide that # by the fully diluted # of outstanding shares.

net asset value = total assets - total liabilities = shareholder's equity - soft assets
..............................................................the fully diluted # of outstanding shares

**blast_investor** Thu Oct 12, 2006 8:38 pm

Re: Solved the problem. Hope this helps new people
Hi hawkhawk

Shareholder equity = book value = total assets - total liabilities
Shareholder equity per share= book value per share = (total assets - total liabilities) / total number of common shares

total value of a company’s physical and financial assets = total assets - intangible asset.

Shareholder equity - all intangible assets = total value of a company’s physical and financial assets - total liabilities

There is issue of per share basis or market cap basis. But overall,
Jason Zeig’s explanation is consistant.

hawkhawk wrote: This whole problem for me was how I was interpreting what shareholder's equity was. I was thinking of the Shareholder's equity of a balance sheet and completly forgetting that

asset - liabilities = shareholder's equity (or Owner's equity)

So here is the clarification:

Net asset value, book value, balance sheet value,tangible asset value

all synonyms for Net worth

Net Worth: Total assets - total liabilities = Shareholder's equity

then take that shareholder's equity # and - soft asset (goodwill, trademarks, other intangibles) and divide that # by the fully diluted # of outstanding shares.

net asset value = total assets - total liabilities = shareholder's equity - soft assets
..............................................................the fully diluted # of outstanding shares