Book Value Less Than Market Value

The book value of an asset is its original purchase cost adjusted for any subsequent changes such as for impairment or depreciation.

Book value less than market value. When the book value is greater than the market value there is profit but if the book value is less than the market value there is a loss. The key differences both of these metrics can be used independently and together when valuing a company s stock. By paulina likos staff writer sept.

When the market value is less than book value the market. For example a company has a p b of. Market value is the price that could be obtained by selling an asset on a competitive open market.

Like the stock market where the value of stocks is always changing the market value of your assets and business could be higher than what you paid one day and lower the next. In the case of many assets its book value is higher than market value. Keep in mind that the market value of an asset could change for better or worse during the course of its useful life.

The price to book p b ratio is a popular way to compare market value and book value. 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. However if these two values coincide there is a situation of no profit no loss for the company.

The market value is the value of a company according to the markets based on the current stock price and the number of outstanding shares. To an investor whether the p b ratio is 0 95 1 or 1 1 the. The asset s book value is equal to its market value.

It is equal to the price per share divided by the book value per share. Book value is always readily available however the projection of market value on the current market price of a single share it is not readily available. Book value is higher than market value.