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I’m still reading Phil Town’s book “Rule #1”. I just finished the Chapter 4. In this chapter he explores his big 5. Here are the salient points, to me.
One of the things Phil likes to see is 10% or better growth in book value. I’m not sure I completely agree with that assessment. The book value is how much money you should get if you sold all the assets of the company. The problem with that is, they may have inventory that has been there for years and could either not find a buyer or would be sold at a steep discount. Ditto for any equipment. If they have purchased any specializes machinery that too might not find any buyers. The same with accounts receivable. They could have some very old AR balances they will never collect on. On the other hand, if they own real estate that might well sell for more than they paid for it.
Posted by The Vorlon at March 29, 2006 1:47 PM