Book value of the Firm

If Firm A has Book value = $2/share. while the market price per share is $5 per share.

still confused about the concept of Book value. is it BV=$2 here refer to the par value of the stock , I mean just look at the Equity part of the balance sheet or BV refers to the total assets divided by the number of share outstanding.


It’s neither. BV is what the company is worth if you sell all its assets and pay all its debts. It’s the stockholder’s equity divided by total shares…common shares only.

stockholder’s equity here refers to book value or market value?


S.Equity = Book Value

Book value…market value is opinion. BV is fact.

So, Stockhoder equity = Retained earning + Additional pay in capital + par x #shares + other comprehensive income

you mean all of these equal to Book value of the company? which equal to total assets - liability?

I don’t they are equal. if you look at the assets and liability , assets can includes the intangible assets like goodwill


trust me passcfaforsure, that is BV.