Question

if the book value of share is less than its real value the company is said to be??
1) over capitalised
2) under capitalised
3) highly levered
4) none

and why??​

Answer 1

Explanation:

If a company's BVPS is higher than its market value per share—its current stock price—then the stock is considered undervalued. ... However, as the assets would be sold at market prices, and book value uses the historical costs of assets, market value is considered a better floor price than book value for a company.

Answer 2

If the share is less then the company is said to be Undervalued.

• The book value of an item is its price less the amount of depletion that has been accrued over time.
• The balance sheet of an item reveals the investment's entire worth.
• The market rate, which is represented in an investment's appropriate valuation, is the value that a purchaser and a seller have consented to.
• The entire book value of a firm could be a good indicator of its overall worth. If the worth of the shares is low, they can be devalued.
• On the other hand, a high book value may indicate that a firm's stock as overpriced.
• For instance, if a stock is trading for $55 but has a $105 value based on expected future cash flows, it is undervalued. The inherent value of the undervalued stock is less than the investment's actual intrinsic value.
• A low price-earnings ratio is one technique to tell if a firm is cheap, albeit it can be challenging to do so.

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