Embedded Value
A common valuation measure used outside North America particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm.
Investopedia Commentary
Embedded value is a conservative valuation method as it excludes certain aspects of goodwill from its calculation of a company's worth. Goodwill includes intangible assets that increase the value of a company beyond its assets minus liabilities, such as strong management, good location, and a happy workforce. Furthermore, to add to its conservatism, the EV calculation of a firm does not allow for any increase in future business.
Related Links
Value By The Book
Can You Count On Goodwill?
The Hidden Value Of Intangibles
See also: Book Value, Goodwill, Net Asset Value, Present Value