BOOK VALUE AND MARKET VALUE

BOOK VALUE:
In simple terms 
"If company sold all its assets and paid up all liabilities and remaining amount divided in all shareholders then value (amount) what investors get per share is book value." 

For example :

If company has a assets of 100 cr and liabilities of 95 cr and total number of outstanding shares (total shares of company ) are 1 cr. 
Then 

Book value of company= 100 cr - 95 cr                                           =5 cr.
Now 5 cr divided by 1 cr (total shares outstanding)
5 cr ÷ 1 cr =5 Rs. (Booka value of shares)

MARKET VALUE:
" it will give you idea about how much premium or discount investors willing to pay."

Market value = total outstanding shares × curren share price.

Market value = 1 cr × 7 Rs (assume)
                        = 7 cr market value 


Market value pr share = 7cr ÷ 1cr
                                       = 7 Rs.

It means investors willing to pay 2 Rs of premium for every share of this company.

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