ASHER: Tessa, do you have a second to help me with my reading of Allied Biscuit's annual report? I've come across several unfamiliar terms, and I want to make sure that I$\text{'}$m interpreting the data and management's comments correctly.

For example, one of the footnotes to the financial statements uses "the book value of Allied Biscuit's shares," and then in another place, it uses "Economic Value Added." I've never encountered those terms before. Do you know what they're talking about?

TESSA: Yes, I do$.$ Let's see if we can make these terms make sense by talking through their meaning and their significance to investors.

The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to an individual asset, such as a piece of equipment, book value refers to the asset's $,$ adjusted for any accumulated depreciation or amortization expense. The $q,$ value, or difference between the machine's historical cost and its accumulated depreciation expense, is called its book value.

In contrast, when the term refers to the entire company, it means the total value of the company's $\_$ as reported in the firm's $$

ASHER: That makes sense. So$,$ what makes this value important to investors is that it is $$ value that can change$-$but only due to a couple of events, including the $$ of Treasury stock, the sale of new common or preferred shares, and the payment of $.$ Equally important, $$ change in response to changes in the market prices of the firm's shares.

TESSA: Right! So$,$ how useful would a firm's book value be for assessing the performance of Allied Biscuit's management?

ASHER: Well, because Allied Biscuit's book value $$ with changes in the market price of the firm's shares, the firm's book value $$ reflect management's efforts to maximize the shareholder wealth and therefore $$ be used to evaluate management's performance.

Now, what about "Economic Value Added"?