What is the difference between book cost and market value?

Market value is the closing price of an asset on the previous day or current price in the market, multiplied by the number of shares you currently own. This tells you where the stock has recently traded. The difference between the book cost and market value tells you your approximate profit or loss were you to liquidate your securities.

What is the book value of a business?

Your business’s book value shows you how much your company should be worth, in theory, if you were to liquidate your assets. However, book value should be taken with a grain of salt. The value of assets changes depending on the market. You will need to know your assets’ or business’s market value if you are ready to sell.

What happens if a book valuation is lower than a market value?

There are three different scenarios possible when comparing the book valuation to the market value of a company. It is unusual for a company to trade at a market value that is lower than its book valuation. When that happens, it usually indicates that the market has momentarily lost confidence in the company.

Is a bank's market value trading at a discount to its book value?

Now that the bank and the economy have recovered, the company's market value is no longer trading at a discount to its book value. Book value and market value are just two metrics to evaluate a company, others include the debt-to-equity (D/E) ratio, earnings per share (EPS), price-to-earnings (P/E) ratio, and the working capital ratio.