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21 July, 15:29

Explain what ""market value of a corporation"" means. How does that compare to the ""book value"" of a corporation?

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  1. 21 July, 15:42
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    Market value of a corporation is its value according to the stock market. Book value on the other hand is the difference between assets and liabilities of a corporation.

    Explanation:

    The market value of a corporation is the value attributed to it by the financial market. It is calculated by multiplying the price of each share by the number of outstanding shares.

    The book value is the value of the corporation if the assets are liquidated and liabilities are paid off. It is calculated by finding the difference between assets and liabilities.

    If the market value of a corporation is greater than its book value it means the market does not believe that the company is worth what it has mentioned in its book value.

    If the market value is higher than the book value, it indicates that the market has confidence in the corporation's ability to generate earnings in the future.
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