Book Value And Market Value Formula

An investor can calculate the book value of an asset when the company reports its earnings on a quarterly basis whereas market value changes every single moment.

Book value and market value formula. The exact formula is. For example a company has a p b of. Therefore the calculation of book value per share will be as follows bvps total common shareholders equity preferred stock number of outstanding common shares 2 93 491 00 cr 592 18 cr.

The book value is now 6 000. It is equal to the price per share divided by the book value per share. For example a piece of manufacturing equipment was purchased for 10 000 and depreciation over 4 years totaled 4 000.

Both book value vs market value are popular choices in the market. The book value per share is a little more complicated. This ratio is used by the investors and other stakeholders to understand how the company is performing or the market s perception about the company and particular stock.

Market value is the price a willing buyer would pay a willing seller. You can use this book value calculator. The accounting concept of recording the price of an asset class is known as book value and on the other hand the discounting which the buyer or investors give for a particular asset class is known as market value.

Let us discuss some of the major differences between book value vs market value. The price to book ratio formula is calculated by dividing the market price per share by book value per share. There is one more formula to calculate ceps.

Ceps net earnings of the company all non cash expense items depreciation amortization etc tax provision outstanding number of equity shares. This is a very simple and easy formula therefore this formula is popular with the common investors. However new technology has replaced this type of equipment so willing buyers believe the market value is only 2 000.