Book Value Vs Market Value Of Assets
Book value the balance sheet provides the book value of the assets liabilities and equity.
Book value vs market value of assets. Book value and market value are two ways to value an asset. Whereas market value is the price lower or higher than the book value which can be obtained in case of selling of that assets class or it is the price which is offered by a customer during the sale of the assets. Difference between book value and market value.
On the other hand book value is a concept related to the value of an asset as recognized by a company on its balance sheet balance sheet the balance sheet is one of the three fundamental financial statements. Ease of determination of value. Book value per common share also known as book value per equity of share or bvps is used to evaluate the stock price of an individual company whereas net asset value or nav is used as a.
Book value of assets is easier to determine as it requires reference to reported balance sheet values. Fair market value of assets is more complex to determine as it requires detailed information of market conditions and prices. In those cases the market sees no reason to value a company differently from its assets.
Market value is that current value of the firm or any asset in the market on which it can be sold. Market value and book value are often very different. However some assets are reported at market value on the balance sheet.
Essentially the market value of an asset is a quantified reflection of the perception of the value of the asset by the market. Market value is the price that could be obtained by selling an asset on a competitive open market. The book value of an asset is its original purchase cost adjusted for any subsequent changes such as for impairment or depreciation.
In comparison book value refers to the value of an asset as reported on the company s balance sheet. Market value is the value of an asset as currently priced in the marketplace. Which is more important to the decision making process.