Face Value, Book Value and Market Value of a Share

Face Value:

• • The Face Value also known as Par Value is the Nominal Value of a share declared by the company. 
  • It is the initial price printed on the share certificate when the shares are issued to the public.
  • The Face Value of a share does not change with the change in the market price. Change in Face Value happens at the time of the Stock Split. The change in Face value is based on the split ratio. For a detailed understanding of stock split and change in face value visit What is a Stock Split?
  • Generally, the Face value of the stock is lower than its Market Value. However, at times in the case of penny stocks, a share might trade lower than its Face value.

Book Value:

• • Book Value is the Net Worth of the Company per share. In other words, it is the amount that the shareholders will get for each share held after selling out all the Assets and paying off the Liabilities.
  • It is the “Net Value” of the company as per books of accounts.
  • Book Value per share is calculated by : (Total Assets-Total Liabilities)/ Total number of shares issued by the company.
  • Book Value of a company is important as it not only tells you the Net Worth of the company but also helps in calculating and comparing the P/B Ratio (Market Price/Book Value) of different companies within the same sector. This ratio helps an investor in concluding whether a company is Undervalued or Overvalued and hence proves helpful in making investment decision.

Market Value:

• • The Market Value of the share represents the Current Price at which the stock is trading at the listed stock exchange.
  • It is also known as CMP or Current Market Price. It is the price that people are willing to pay to purchase the stocks of a particular company.
  • Market Value generally tends to be greater than the Book Value since it reflects the profitability, integrity, and future growth prospects of a company.

Details regarding Face Value, Market Value, and Book Value of any company are available on the company’s own website or any financial information websites like Money Control, NSE, BSE.