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Please explain the concepts of book value, market value and liquidation value of a company. When...

Please explain the concepts of book value, market value and liquidation value of a company.

When and why they might be different than each other?

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Answer #1

Answer-

Book value is the net worth of the company's assets based on historical prices and is presented as on the balance sheet as the actual cost minus depreciation.

Market value represents the value of a company according to the current market price. The market value is a value that represents the price, an asset would get in the marketplace.

The liquidation value of a company is equal to what value remains after all the assets have been sold and all liabilities have been paid off.

Book value of the company is different as it as on the balance sheet whereas the market value represents the current market price as per present value and finally liquidation value is used when the company is on the verge of closure and all the assets remaining are liquadated to obtain the final value of the company before all the payments are paid.

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