BOOK VALUE AND MARKET VALUE

Book Value and Market Value



Book Value and Market Value

Introduction

Book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company's book value is its total assets minus intangible assets and liabilities. However, in practice, depending on the source of the calculation, book value may variably include goodwill, intangible assets, or both.(Mohan, 2008).

Market value is the price at which an asset would trade in a competitive Walrasian auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.

Market value is a concept distinct from market price, which is “the price at which one can transact”, while market value is “the true underlying value” according to theoretical standards. The concept is most commonly invoked in inefficient markets or disequilibrium situations where prevailing market prices are not reflective of true underlying market value. (Mohan, 2008)

Ranbaxy Laboratories book value and market value

Ranbaxy Laboratories has gone on record saying that it will acquire Bangalore-based Biovel Lifesciences for an undisclosed amount. The proposed transaction will give Ranbaxy access to all of Biovels products, pipeline, intellectual property know-how and manufacturing facility.( Subrakanian, 2007)

Ranbaxy Laboratories has an equity capital of Rs 210.19 crore as of March 2009. The face value per share is Rs 5. At the current price of Rs 509.3, book Value of 84.23 and P/BV at 6.05.

Shares of Ranbaxy Laboratories Ltd continued outperforming the Bombay Stock Exchange's health-care index after it announced the acquisition of a majority stake in Zenotech Laboratories Ltd. The acquisition would ...