Book

value. The book value of a stock is based on the net profits or deficit of the corporation which i ued it. It is a frequent practise in quoting bank stocks to give book values as well as market prices. Illustration: Ifa 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.