Difference Between Book Value And Market Value
The main dissimilarities or difference between book value and market value can be highlighted as follows:
1. Introduction
Book Value: Value of asset recorded in the firm's financial statements
Market Value: Value of asset according to the market price
2. Determination
Book Value: It is determined by subtracting depreciation from original cost of the asset
Market Value: It is determined by current market price
3. Nature
Book Value: It is theoretical assumption
Market Value: It is actual value obtained in the market
4. Influenced By
Book Value: It is influenced by depreciation or amortization cost
Market Value: It is influenced by market fluctuation
5. Denotes
Book Value: It denotes the equity of business firm
Market Value: It denotes market price
6. Frequency
Book Value: It fluctuates periodically
Market Value: It fluctuates frequently
7. Availability
Book Value: It is available or can be obtained at any time
Market Value: It is not available at any time
Book Value Vs Market Value (Comparison Chart)
I hope this post is helpful to understand the difference between book value and market value and to make comparison between them.
Book Value Vs Market Value (Comparison Chart)
Basis For Difference
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Book Value
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Market Value
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Introduction
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Asset's value as per the financial statement
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Determination
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Subtracting depreciation from original cost
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Current price in the market
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Nature
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Theoretical
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Actual
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Influenced By
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Depreciation and amortization
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Market fluctuation
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Denotes
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Equity
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Market price
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Fluctuation Frequency
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Periodically
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Regularly
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Obtained
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Any time
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Not available any time
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I hope this post is helpful to understand the difference between book value and market value and to make comparison between them.
