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.