Book Value Vs Market Value

In this article we will discuss market value vs book value and determine the key similarities and differences between them.

Book value vs market value. Book value is equal to the value of the firm s equity. 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.

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. A lower price per book value provides a higher margin of safety. 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.

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 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. Book value changes annually but market value changes every next moment.

They represent different aspects of the value of an asset. Market value is the price currently paid or offered for an asset in the marketplace. Conversely market value shows the current market value of the firm or any asset.