There are many different things that can cause a company’s actual value to be skewered in real life from what an investor would perceive it to be on paper. One key thing to consider when evaluating a company’s worth is their market value compared to book value. As our text explains, market value is what the company is essentially worth in the stock market. Book value is the value of the company on paper according mainly to the balance sheet. A key ratio when determining worth is the companies Price-to-book ratio which will show you how much the company is worth based on the stock market compared to their balance sheet. A high ratio would indicate the company is worth much more than their assets alone which is what any investor would demand. A number falling under one could reflect that the company isn't performing up to a break even, or up to what they are even worth on paper. Other key ratios include ROA (return-on-assets) and ROE (return-on-equity) which are key indicators of how the company performs given its financing. Efficiency is another key area for many investors which shows how much money or how well a company can operate on what they have. If two companies are in the same industry, and company A can produce $100M in NOI with four employees, while it takes company B six employees to meet the $100M mark, then company A will have a higher efficiency ratio. The same principal goes for machinery that is being considered for purchase. A financial manager will consider the cost it takes to run the machine compared to its production load. Investors looking at efficiency essentially want to know their investment is being “maximized” to its fullest potential. High efficiency ratios create value for shareholders with maximized profits on assets (Fundamentals of corporate finance). This value isn't always reflected in the financial statements as efficiency ratios can be high or low regardless of the size of the company or the income it brings in. Also discussed in our book, price to earnings or the P/E ratio is a key ratio that should be evaluated before any investor invests in a company. Once again, the income statement and balance sheet does not directly reflect this ratio, as fluctuations of income from company to company lead to different ratios. A company with very small income can have a high P/E ratio while a multi-billion dollar corporation can have a smaller ratio. It is up to the company executives to create value for all shareholders regardless of income, and make sure the dividends show growth. Many investors are not interested in companies that grow. Most would invest in a company today with a smaller dividend that will grow, than in a company that has a larger dividend but isn't growing (Between the numbers).  Brealey, R. A., Myers, S. C., & Marcus, A. J. (2018). Fundamentals of corporate finance (9th ed.). New York, NY: McGraw-Hill Education.  Chapter 4 measuring market value  Oberoi, R. (2014, September 01). Between the numb.

1. There are many different things that can cause a company’s
actual value to be skewered in real life from what an investor
would perceive it to be on paper. One key thing to consider
when evaluating a company’s worth is their market value
compared to book value. As our text explains, market value is
what the company is essentially worth in the stock market. Book
value is the value of the company on paper according mainly to
the balance sheet. A key ratio when determining worth is the
companies Price-to-book ratio which will show you how much
the company is worth based on the stock market compared to
their balance sheet. A high ratio would indicate the company is
worth much more than their assets alone which is what any
investor would demand. A number falling under one could
reflect that the company isn't performing up to a break even, or
up to what they are even worth on paper. Other key ratios
include ROA (return-on-assets) and ROE (return-on-equity)
which are key indicators of how the company performs given its
financing. Efficiency is another key area for many investors
which shows how much money or how well a company can
operate on what they have. If two companies are in the same
industry, and company A can produce $100M in NOI with four
employees, while it takes company B six employees to meet the
$100M mark, then company A will have a higher efficiency
ratio. The same principal goes for machinery that is being
considered for purchase. A financial manager will consider the
cost it takes to run the machine compared to its production load.
Investors looking at efficiency essentially want to know their
investment is being “maximized” to its fullest potential. High
efficiency ratios create value for shareholders with maximized
profits on assets (Fundamentals of corporate finance). This
value isn't always reflected in the financial statements as
efficiency ratios can be high or low regardless of the size of the
company or the income it brings in.
Also discussed in our book, price to earnings or the P/E ratio is

2. a key ratio that should be evaluated before any investor invests
in a company. Once again, the income statement and balance
sheet does not directly reflect this ratio, as fluctuations of
income from company to company lead to different ratios. A
company with very small income can have a high P/E ratio
while a multi-billion dollar corporation can have a smaller ratio.
It is up to the company executives to create value for all
shareholders regardless of income, and make sure the dividends
show growth. Many investors are not interested in companies
that grow. Most would invest in a company today with a smaller
dividend that will grow, than in a company that has a larger
dividend but isn't growing (Between the numbers).
Brealey, R. A., Myers, S. C., & Marcus, A. J.
(2018). Fundamentals of corporate finance (9th ed.). New York,
NY: McGraw-Hill Education.
Chapter 4 measuring market value
Oberoi, R. (2014, September 01). Between the numbers.
Retrieved September 10, 2018, from
https://www.businesstoday.in/moneytoday/investment/key-
financial-ratios-analyze-company-stock-
investment/story/209789.html
para. 2- 18
1
Running head: DISCUSSION BOARD 2 – MARKET VALUE
VS. BOOK VALUE
6
DISCUSSION BOARD 2 – MARKET VALUE VS. BOOK
VALUE

3. Discussion Board 2 – Market Value vs. Book Value
Discussion Board 2 – Market Value vs. Book Value
As has been discussed throughout the readings in the text,
a firm can have multiple different values, each of which is
representative of different factors and important for many
reasons. Two of these values are book value and market value.
Book value is what can be found on a company’s financial
statements, and is the difference between a company’s total
assets and total liabilities, and essentially equates to what
would be left if a company sold its assets and paid off its
liabilities. Market value, on the other hand, is the stock market
value of a company, and is calculated by multiplying the
number of shares outstanding by the current trading price per
share. If book value is greater than market value, it is a sign
that the public has low confidence in the future profits of the
company. If market value is greater than book value, however, a
company likely has a confident public following, a profitable
existence, and a potentially inflated earning’s power of the
assets of the company (Gad, 2013). One example of a company
with a market value which is much higher than its book value is
Apple Inc, which is currently showing a price to book value of
9.3, meaning the market value of the company is 9.3 times
higher than the book value (Apple Inc Price to Book Value,
2018). Based on the profitability and success of this company,
and its continued innovation, this value makes sense, and is not
necessarily a bad sign for the company.
Company executives can create the most value for all
stakeholders by striving to maximize the long-term market value
of the firm. In this way, a company and its executives need to
be focused not just on the market value of a company and how it
performs in the stock market, but rather to focus on “how

4. customers, suppliers, employees, financiers, communities, and
managers interact to create value, [as] there is no single formula
for balancing or prioritizing stakeholders” (Freeman & Elms,
2018).
References
Apple Inc price to book value. (n.d.). Retrieved September 10,
2018, from
https://ycharts.com/companies/AAPL/price_to_book_value
Freeman, R. E., & Elms, H. (2018, January 4). Business is to
create value for stakeholders.
Retrieved from https://sloanreview.mit.edu/article/the-social-
responsibility-of-business-is-to-create-value-for-stakeholders/
Gad, S. (2013, November 7). The market value versus book
value. Retrieved from
https://finance.yahoo.com/news/market-value-versus-book-
value-173000512.html
Standardized Rubrics Template
Discussion Board Rubric (50 points)
Criteria
Levels of Achievement
Content 70% (35 points)
Advanced
Proficient
Developing
Not present
Key Topics (10 points)
10 points
All key components of the Discussion Board Forum prompt are
answered in the thread.
8 to 9 points
Most key components of the Discussion Board Forum prompt
are answered in the thread.
1 to 7 points

5. At least one key components of the Discussion Board Forum
prompt are answered in the thread.
0 points
Clarity and Relevance of Support of Key Topics (5 points)
5 points
There is a clear, logical flow to the major points to the thread
4 points
There is a mostly clear and mostly logical flow to the major
points to the thread
1 to 3 points
There is a little clarity and the flow is not in a coherent logical
manner.
0 points
Depth of Explanation and Details of each Key Topic (15 points)
14 to 15 points
Major points are supported by the following:
· Textbook and article (at least 2 citations in current APA
format)
· Good examples (pertinent, conceptual, or personal examples
are acceptable); and
· Thoughtful analysis (considering assumptions, analyzing
implications, comparing/contrasting concepts)
13 points
Major points are supported by the following:
· Textbook and article (at least 1 citations in current APA
format)
· Examples (mostly pertinent, conceptual, or personal examples
are acceptable); and
· Some thoughtful analysis (considering assumptions, analyzing
implications, comparing/contrasting concepts)
1 to 12 points
Major points are supported by the following:
· Textbook only
· Examples did not provide any substantive value to the post

6. · Little thoughtful analysis was incorporated into the discussion
post.
0 points
Replies (5 points)
5 points
Each reply brings clarity to the issue being discussed, relating
issues to Scripture/Biblical principles and experiences enhance
the original post were used
4 points
Each reply brings some clarity to the issue being discussed,
relating issues to Some Scripture/Biblical principles and
experiences enhance the original post were used
1 to 3 points
Each reply brings little clarity to the issue being discussed,
relating issues to few, if any, Scripture/Biblical principles and
experiences enhance the original post were used.
0 points
Structure 30% (15 points)
Advanced
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Spelling, Grammar, and APA Format (5 points)
5 points
Proper spelling, grammar, and current APA format are used.
4 points
Mostly proper spelling, grammar, and current APA format are
used.
1 to 3 points
Little attention was given to proper spelling, grammar, and
current APA format.
0 points
Length Requirements (5 points)

7. 5 points
The required word count (at least 300 words) is met.
4 points
The word count (> 250 words) is almost met.
1 to 3 points
The word count was substantially lower than expected. (Less
than 250 words)
0 points
Replies (5 points)
5 points
You submitted at least two replies to classmates’ posts and
Proper spelling, grammar, and current APA format are used.
4 points
You submitted at least two replies with mostly proper spelling,
grammar, and current APA format are used.
1 to 3 points
You only submitted one reply and/or little attention was given
to proper spelling, grammar, and current APA format.
0 points