What is difference between Face Value and Book Value

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Daya

Daya (Querist)
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27 March 2025 what is difference between Face Value and Book Value and when it is used.

Dhirajlal Rambhia online

Dhirajlal Rambhia online

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27 March 2025 Face Value: This is the nominal or par value of a financial instrument, such as a bond or stock, as stated on the security. It represents the amount that will be paid to the holder at maturity for bonds or the initial value assigned to shares when they are issued. Face value remains constant throughout the life of the security and is primarily used for accounting purposes and legal matters related to the instrument.

Book Value: Also known as net asset value (NAV), book value measures a company's total net worth, calculated by subtracting total liabilities from total assets. This figure reflects the intrinsic value of a company based on its financial statements and provides insights into its financial health. Book value can fluctuate over time as a company’s assets and liabilities change.

While face value provides a fixed nominal amount associated with securities, book value offers a dynamic measure of a company's worth based on its financial position.