<p>They are not the same.</p>

<p>Basic accounting equation:</p>

<pre><code>Assets = Liability + Shareholder Equity
</code></pre>

<p>Assets refers to what the company actually owns: cash, property, inventory, etc.</p>

<p>Assets are paid for in two major ways: debt (liability) and stock (equity). Essentially, everything a company owns is paid for by a combination of (1) getting loans from other entities or issuing bonds and (2) having other entities own a part of the company. </p>

<p>Equity includes a number of things, but the most common form is stock, or ownership of a company. </p>

<p>An example of this: if you own a pen company, assets might include pens, and equity would be your ownership of the company. </p>

CC BY-SA 3.0
2016-06-27T13:40:41.063Z
2016-06-27T13:49:00.130Z
2016-06-27T13:49:00.130Z
Kontorus
<p>What is the difference between (market value of equity/book value of <strong>equity</strong>) ratio and (market value of assets/book value of <strong>assets</strong>) ratio?</p>

<p>In my opinion both measure fairly the same? Is this correct? The first (MV/BV equity) is commonly used as Tobin's Q. Can I use (MV/BV assets) for the same?</p>

<p>Thanks for your help!</p>

<finance><corporate-finance><accounting><economic-measurement>
Definition of market to book value?
jeffrey
# Definition of market to book value?

(Asked by: username_0 on 2016-06-27)

What is the difference between (market value of equity/book value of **equity**) ratio and (market value of assets/book value of **assets**) ratio?

In my opinion both measure fairly the same? Is this correct? The first (MV/BV equity) is commonly used as Tobin's Q. Can I use (MV/BV assets) for the same?

Thanks for your help!

**Tags:** finance, corporate-finance, accounting, economic-measurement


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## 1 answers

### Answer by username_1 on 2016-06-27. Score: 2

They are not the same.

Basic accounting equation:

```
Assets = Liability + Shareholder Equity

```

Assets refers to what the company actually owns: cash, property, inventory, etc.

Assets are paid for in two major ways: debt (liability) and stock (equity). Essentially, everything a company owns is paid for by a combination of (1) getting loans from other entities or issuing bonds and (2) having other entities own a part of the company.

Equity includes a number of things, but the most common form is stock, or ownership of a company.

An example of this: if you own a pen company, assets might include pens, and equity would be your ownership of the company.


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