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Can you define the market value to book value ratio?

Accounting Auditing Financial Reporting Financial Management
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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/05/05
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by Deleted user

A ratio used to compare the market value of the firm with the book value.

Basically used to know whether the book value is overstated or understated.

Book to market = Book Value / Market value. 

If above 1 overstated, below one understated.

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