💡 Why is Book Value sometimes higher than Market Value?

We were recently asked by a client:
“Why is the book value (shareholders’ equity in financial statements) higher than the market value (stock price × total shares)?”

Let’s break it down.

1️⃣ Book Value

• Found on the balance sheet.
• Represents what shareholders would theoretically get if the company was liquidated (sell assets, pay debts).

2️⃣ Market Value

• Stock price × total shares.
• Reflects investor expectations of future performance, growth, and profitability.

📊 Key insight:

• If a company has a low market price relative to its book value, investors might have low expectations for its future.
• Conversely, a company with high PE indicates investors expect strong growth.

⚠️ Takeaway:

• PE and PB methods are useful rough guides, not precise valuations.
• Always consider both current financials and future expectations.

💬 Curious how this applies to your business or investment?
Drop us a message or comment below—we can help you understand what your company’s numbers really say!

#ORNA #PE #PB #Valuation #MarketValue