Book Value Of Equity

From the perspective of an analyst or investor it is all the better if the balance sheet of the company is marked to market i e it captures the most current market value of the assets and the liabilities.

Book value of equity. The book value of equity is equal to total assetsminus total liabilities preferred stocks and intangible assets. The book value of equity more widely known as shareholder s equity is the amount remaining after all the assets of a company are sold and all the liabilities are paid off. This article has been a guide to what is book.

A company s market value of equity differs from its book value of equity because the book value of equity focuses on owned assets and owed liabilities. Book value of equity is an important concept because it helps in the interpretation of the financial health of a company or firm as it is the fair value of the residual assets after all the liabilities are paid off. When a stock is undervalued it will have a higher book value.

The market value of equity is also distinct from the book value of equity. Book value of equity per share effectively indicates a firm s net asset value total assets total liabilities on a per share basis.