# Definition of market to book value?

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!

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.