{"id":23750,"date":"2026-01-03T06:21:10","date_gmt":"2026-01-03T06:21:10","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?p=23750"},"modified":"2026-01-03T06:21:11","modified_gmt":"2026-01-03T06:21:11","slug":"book-value-vs-market-value-of-shares","status":"publish","type":"post","link":"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/","title":{"rendered":"Book Value vs Market Value of Shares: Meaning, Formula &amp; Key Differences"},"content":{"rendered":"\n<p>Before investing in shares, everyone is concerned about the valuation of shares, whether they are fairly valued or not, while a few investors focus only on the current market price of the share. Both book value and market value plays an important role in making informed decisions.<\/p>\n\n\n\n<p>In today\u2019s blog post, we will give you an overview of the book value and market value of shares, along with their key differences.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#What_is_the_Book_Value_of_Shares\" title=\"What is the Book Value of Shares?\">What is the Book Value of Shares?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Features_of_the_Book_Value_of_Shares\" title=\"Features of the Book Value of Shares\">Features of the Book Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Importance_of_the_Book_Value_of_Shares\" title=\"Importance of the Book Value of Shares\">Importance of the Book Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Formula_to_Calculate_the_Book_Value_of_Shares\" title=\"Formula to Calculate the Book Value of Shares\">Formula to Calculate the Book Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#What_is_the_Market_Value_of_Shares\" title=\"What is the Market Value of Shares?\">What is the Market Value of Shares?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Features_of_Market_Value_of_Shares\" title=\"Features of Market Value of Shares\">Features of Market Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Importance_of_Market_Value_of_Shares\" title=\"Importance of Market Value of Shares\">Importance of Market Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Difference_Between_Book_Value_and_Market_Value_of_Shares\" title=\"Difference Between Book Value and Market Value of Shares\">Difference Between Book Value and Market Value of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wp-api.pocketful.in\/blog\/book-value-vs-market-value-of-shares\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-book-value-of-shares\"><span class=\"ez-toc-section\" id=\"What_is_the_Book_Value_of_Shares\"><\/span>What is the Book Value of Shares?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"h-what-is-the-book-value-of-shares-features-of-the-book-value-of-shares\">Book value of a share refers to the net asset value of the company, which is derived after adjusting its liabilities, and it is divided by the total number of outstanding shares. It reflects the value of each share unit, which is calculated based on the company&#8217;s financials.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-features-of-the-book-value-of-shares\"><span class=\"ez-toc-section\" id=\"Features_of_the_Book_Value_of_Shares\"><\/span>Features of the Book Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key features of the book value of the shares are as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Financial Data:<\/strong> The book value of shares is calculated based on the company\u2019s financial information, including assets and liabilities.<\/li>\n\n\n\n<li><strong>Net Worth:<\/strong> It reflects the net worth of the company, which is derived after adjusting for all its liabilities.<\/li>\n\n\n\n<li><strong>Higher the Better:<\/strong> The higher the book value of the company, the better the investment opportunity.<\/li>\n\n\n\n<li><strong>Fundamental Investing:<\/strong> The book value of the company is generally used by the investor for picking right stocks.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-importance-of-the-book-value-of-shares\"><span class=\"ez-toc-section\" id=\"Importance_of_the_Book_Value_of_Shares\"><\/span>Importance of the Book Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key importance of the book value of shares is as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Actual Valuation:<\/strong> The book value helps in the identification of the actual value of shares based on the financial statements, which helps an investor in identifying whether the shares are fairly valued or not.<\/li>\n\n\n\n<li><strong>Fundamental Analysis:<\/strong> It helps in analysing a company based on the fundamentals to find out its actual value.<\/li>\n\n\n\n<li><strong>Reduces Risk:<\/strong> Investing in stocks which are trading in a range around its book value is considered a safe bet by investors.<\/li>\n\n\n\n<li><strong>Strength<\/strong>: If the book value of the companies is increasing over a period, it reflects the effective management and strong financials and growth in the company.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-formula-to-calculate-the-book-value-of-shares\"><span class=\"ez-toc-section\" id=\"Formula_to_Calculate_the_Book_Value_of_Shares\"><\/span>Formula to Calculate the Book Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The formula to calculate the book value of a share is as follows:<\/p>\n\n\n\n<p>Book Value of Share = (Total Assets &#8211; Total Liabilities &#8211; Preference Share Capital) \/ Total Number of Equity Shares Outstanding<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-example-of-book-value\">Example of Book Value<\/h3>\n\n\n\n<p>Suppose a company named ABC Limited has a total asset of INR 12 crore, liabilities of 7 crore, and preference share capital of 1 crore and 8 lakh of equity shares.<\/p>\n\n\n\n<p>Let\u2019s calculate the book value of ABC Limited.&nbsp;<\/p>\n\n\n\n<p>By applying the formula&nbsp;<\/p>\n\n\n\n<p>Book Value per share = Total Assets &#8211; Total Liabilities &#8211; Preference Share Capital \/ Total Outstanding Equity Share<\/p>\n\n\n\n<p>= (12cr. &#8211; 7cr. &#8211; 1cr.) \/ 8lakhs&nbsp;<\/p>\n\n\n\n<p>= 4cr. \/ 8lakhs<\/p>\n\n\n\n<p>= 50 INR<\/p>\n\n\n\n<p>Hence, the book value per share is 50 INR.<\/p>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/intrinsic-value-vs-book-value\/\">Intrinsic Value vs Book Value<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-market-value-of-shares\"><span class=\"ez-toc-section\" id=\"What_is_the_Market_Value_of_Shares\"><\/span>What is the Market Value of Shares?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The market value of a share refers to the publicly traded current price of a share at which the shares of a company are traded on the stock exchange. The market value of shares is derived from the demand and supply of shares, which is influenced by the sentiments of investors, the performance of the company, future growth expectations, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-features-of-market-value-of-shares\"><span class=\"ez-toc-section\" id=\"Features_of_Market_Value_of_Shares\"><\/span>Features of Market Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key features of the market value of shares are as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Fluctuations<\/strong>: The market value of shares changes on a real real-time basis; it changes in a fraction of a second depending upon the liquidity of the share.<\/li>\n\n\n\n<li><strong>Demand and Supply: <\/strong>The price discovery is primarily impacted by the demand and supply of the shares by the investor.<\/li>\n\n\n\n<li><strong>Market Capitalisation:<\/strong> The market capitalisation of the company is calculated based on the market value of shares.<\/li>\n\n\n\n<li><strong>Differ from Book Value:<\/strong> The market value of shares can differ from the book value of shares. It can either be higher or lower than the book value, depending on the various factors.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-importance-of-market-value-of-shares\"><span class=\"ez-toc-section\" id=\"Importance_of_Market_Value_of_Shares\"><\/span>Importance of Market Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key importance of the market value of shares is as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Decision Making:<\/strong> The Market value of the company can help an investor in deciding whether to buy, sell or hold the shares.&nbsp;<\/li>\n\n\n\n<li><strong>Comparison<\/strong>: The market value can also be used by the investor to compare the market value of different shares to make an informed decision.<\/li>\n\n\n\n<li><strong>Market Sentiment<\/strong>: The increasing value of shares represents the positive market sentiment, and vice versa. As market sentiment is a crucial factor for making investment decisions.<\/li>\n\n\n\n<li><strong>Corporate Actions: <\/strong>The market value of shares is significantly impacted by the various corporate actions, such as buybacks, bonus shares, stock splits, etc.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-difference-between-book-value-and-market-value-of-shares\"><span class=\"ez-toc-section\" id=\"Difference_Between_Book_Value_and_Market_Value_of_Shares\"><\/span>Difference Between Book Value and Market Value of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key difference between book value and market value of shares is as follows:<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th>Particular<\/th><th>Book Value<\/th><th>Market Value<\/th><\/tr><\/thead><tbody><tr><td><strong>Calculation<\/strong><\/td><td>It is calculated based on the assets, liabilities of the company.<\/td><td>The market value of the company is calculated based on the demand and supply of the shares.<\/td><\/tr><tr><td><strong>Changes<\/strong><\/td><td>Book value is historical in nature.<\/td><td>Market value is dynamic and changes on a real real-time basis.&nbsp;<\/td><\/tr><tr><td><strong>Reflection<\/strong><\/td><td>It is reflected in the financial statement of the company.<\/td><td>The market value of a share is reflected on the stock exchange on which it trades.<\/td><\/tr><tr><td><strong>Usage<\/strong><\/td><td>The book value of a share is generally used by the long-term investor.<\/td><td>The Market Value of a share is often used by traders.<\/td><\/tr><tr><td><strong>Sentimental Impact<\/strong><\/td><td>The book value of the share is not impacted by the sentiment of investors.<\/td><td>The market value of a share is highly impacted by the investors&#8217; sentiments.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/stock-market-vs-real-estate\/\">Stock Market vs Real Estate: Which Is Better?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>On a concluding note, book value and market value serve different purposes but are equally important for investors to make investment decisions. The book value of the share reflects the financial strength of the company and is calculated based on the assets and liabilities of the company. On the other hand, market value of the company reflects the current share price of the company, which an investor is willing to pay. However, investing based only on the book value or market value of a share is not a sensible decision. One should consult their investment advisor before making an informed decision.<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">S.NO.<\/th><th class=\"has-text-align-left\" data-align=\"left\">Check Out These Interesting Posts You Might Enjoy!<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\">1<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-fund-vs-etf-are-they-same-or-different\/\">Mutual Fund vs ETF. Are They Same Or Different?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">2<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/etf-vs-index-fund\/\">ETF vs Index Fund: Key Differences You Must Know<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">3<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/etf-vs-stock\/\">ETF vs Stock \u2013 Which One is the Better Investment Option?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">4<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/gold-etf-vs-gold-mutual-fund\/\">Gold ETF vs Gold Mutual Fund: Differences and Similarities<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">5<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/intraday-vs-positional-trading\/\">Intraday vs. Positional Trading \u2013 Key Differences<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions-faqs\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">Which is more important, market value or book value?<\/h3><p class=\"saswp-faq-answer-text\">Both market value and book value are equally important; book value helps in assessing the intrinsic value of a share, and market value helps in understanding the sentiment of the investor.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Why book value change over time?<\/h3><p class=\"saswp-faq-answer-text\">Book value changes over time based on the company&#8217;s profitability, assets, liabilities, etc.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Can the market value of a share be lower than the market value?<\/h3><p class=\"saswp-faq-answer-text\">Yes, there are various stocks which trade below their actual book value. This happens because investors think that the actual value of the asset is less than its recorded book value.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Is a stock undervalued if its market value is lower than its book value?<\/h3><p class=\"saswp-faq-answer-text\">Not always. A market value lower than book value may indicate undervaluation, but it can also reflect poor business performance, weak future prospects, or sector-specific challenges. Investors should combine this with fundamental analysis.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Why do long-term investors focus more on book value?<\/h3><p class=\"saswp-faq-answer-text\">Long-term investors use book value to assess a company\u2019s intrinsic strength, financial stability, and asset backing, making it useful for fundamental and value investing strategies.<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"<p>Before investing in shares, everyone is concerned about the valuation of shares, whether they are fairly valued or not, while a few investors focus only on the current market price of the share. Both book value and market value plays an important role in making informed decisions. In today\u2019s blog post, we will give you [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":23856,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"is_paper_insight":false,"paper_insight_image":0,"paper_insight_pdf":0,"paper_insight_ppt":0,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-23750","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"acf":{"freelancer":"Harjyot"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Book Value vs Market Value of Shares: Key Differences<\/title>\n<meta name=\"description\" content=\"Understand the difference between book value and market value of shares, their meaning, importance, formula, and how investors use them for valuation decisions.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Book Value vs Market Value of Shares: Meaning, Formula &amp; 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