Book value per share may not approximate market value per share because:
A) Land may have substantially increased in value.
B) Market value reflects future potential earning power.
C) Investments may have a market value substantially above the original cost.
D) All of these are reasons why book value per share may not approximate market value per share.

Question

Quizplus · Accepted Answer

Book value per share only reflects the historical costs and assets on the balance sheet, while market value per share takes into account the company's future potential earnings, growth prospects, and the perceived value of its assets. Therefore, land appreciation, investments with high market value, and other factors can cause the market value per share to deviate significantly from the book value per share.

Book Value Per Share May Not Approximate Market Value Per