Book Value And Market Value Will Always Be The Same Dollar Amount

Book value and market value are key.

Book value and market value will always be the same dollar amount. This means the market sees your asset as being worth no more or less than what you paid for it minus depreciation. It is a dollar amount computed based on. Book value is based solely upon the company s reported financial condition while market value is primarily based upon the company s cash flow and the public s confidence in how the company will do.

Market value is equal to market capitalization. The number of shares outstanding almost always remains the same. Book value per share is of greater concern to the financial manager than market value per share.

Let s say an asset has a book value of 2 000. Book value is equal to the value of the firm s equity. Book value per share and market value per share are usually the same dollar amount.

A company buys a machine for 100 000 and subsequently records depreciation of 20 000 for that machine resulting in a net book value of 80 000. Example of the difference between book value and market value. Market value is that current value of the firm or any asset in the market on which it can be sold.