Say, a company owns a building valued at $100 million, and it has cash, inventory and other assets worth another $50 million. However, it has bank borrowings and other liabilities totalling $50 million. Thus its net assets amount to $100 million.
In October 2007, such a company was valued at $350 million, that is, 3.5 times its net tangible assets or book value. Assume again that this company has $17 million of goodwill, which is an intangible asset, on its books.
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