Book Value Vs Market Value

Market value is the price currently paid or offered for an asset in the marketplace.

Book value vs market value. Book value is the actual worth of an asset of the company whereas market value is just a projected value of the firm s or asset s worth in the market. When the market value is less than book value the. In this article we will discuss market value vs book value and determine the key similarities and differences between them.

However when the market gives the company a higher value because of its assets and earning power then it reflects in the company having a higher market value to its book value. A lower price per book value provides a higher margin of safety. Companies that realize high profits on a consistent basis tend to have greater market value due to heightened investor value in the company s ability to grow its earnings and generate revenue.

Market value and book value are fundamental concepts in accounting and finance. Book value gives us the actual worth of the assets owned by the company whereas market value is the projected value of the firms or the assets worth in the market. Book value is equal to the value of the firm s equity while market value indicates the current market value of any firm or any asset.

Book value changes annually but market value changes every next moment. It is possible to get the price per book value by dividing the market price of a company s shares by its book value per share. Book value is equal to the value of the firm s equity.