Book Value Of Equity And Market Value Of Equity
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 of equity and market value of equity. The market value of equity is also distinct from the book value of equity. The book value of equity is equal to total assetsminus total liabilities preferred stocks and intangible assets. 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.
The price to book p b ratio is a popular way to compare market value and book value. For example a company has a p b of. Book value of equity also known as shareholder s equity is a firm s common equity that represents the amount available for distribution to shareholders.
It is equal to the price per share divided by the book value per share.