5. Price × Book Value
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Coca Cola Apple McDonald's
Book Value
Price per share
Coca Cola Apple McDonald's
Source NYSE NASDAQ NYSE
Price per share 42,24 449,98 102,92
Market Cap 188.13B 423.02B 103.21B
P/BV ratio 5,76 3,58 6,75
6.
7. “This spread is particularly caused by
fundamental, technical a psychological aspects
of price movement.”
8. “Yes, but I think it is more caused by an
inaccuracy in accounting…“
9.
10. “…that is caused by insufficient legislation of
accounting for intangible assets.“
13. Intangible Assets
An Intangible asset in an identifiable non-
monetary asset without physical substance
held for use in the production or supply of
goods or services, for rental to others, or for
administrative purposes.
(IAS, 38)
14. Criteria for initial recognition
• Must be identifiable
• Expected future economic benefits
attributable to the asset would flow to the
entity
• Cost could be measured reliably
• Asset is controlled by the entity
15. Examples of Intangible Assets
Logo
Company‘s
reputation
Research and
Development
Domain Name
Patent
Copyright
utility models
industrial
designs
Know-how
trademarks
Brand Value
?
?
?
?Skillful Staff??
? ?
Goodwill
?
17. Consequences
• Not possible to recognize existing assets in
their fair value (e. g. recipe for Coca-Cola or
Coca-Cola logo)
• Not possible to revaluate recognized assets
• => Book value is undervaluated
18. Conclusion and Recommendation
If company could recognize and revaluate most
of their intangible assets this could reduce
spread between market cap. and share value
and company‘s value would be more
transparent – investments would be safer.