Book Value Vs Face Value

Book value is an important measure for safety of investment while investing in a stock.

Book value vs face value. Net worth number of shares. Essentially book value is the original cost of an asset minus any depreciation depreciation expense depreciation expense is used to reduce the value of plant property and equipment to match its use and wear and tear over time. Cipla s face value share rs 2 0 won t change unless the company splits the stock to halve the stock price by doubling the number of shares book value is value of the company s assets if it were to be liquidated on a day less all debt holder claims.

There are rules based on which these value shall be recorded in the companies book of accounts. Face value and book values are more of a static theoretical numbers. In a nutshell market value per share is the current value at which the stock is trading in the market.

It is a measure of the amount per share that a shareholder will get if the company is liquidated today. Apart from the face value you need to concentrate on the market value and the book value of the stock. Face value is the value of a company which is listed in its books and share certificate.

The carrying value or book value is an asset value based on the company s balance sheet which takes the cost of the asset and subtracts its depreciation over time the fair value of an asset is. Total assets rs 12 461 79 cr total debt rs 1 380 61 cr. Whereas intrinsic value and market value are more liquid and real numbers.

Book value is also known as net asset value. Face value and book value are entries made in companies balance sheet for the sake of bookkeeping only. Book value indicates an asset s value that is recognized on the balance sheet.

It is calculated as. In the example here with cipla. Recently when i was navigating my quora profile i got an answer request for the question what is the difference between face value and market value of a company although both these are elementary terms related to stocks however they may be a little confusing for the beginners.