Ann: Trading Halt, page-29

Let me provide some information that you may find useful.

Asset (book) value does not equal price value (market cap). This is otherwise known as P/B ratio, so more often than not the P/B ratio can be above or below 1.

Finance courses will include following equation which is the underlining principle of any Balance Sheet:

Assets = Liabilities (debt) + Capital (equity)

or alternatively,

Assets less Liabilities = Capital (equity)

In your example, FFG has an asset value of $49m but from the accounting equation above we know that you must deduct any debt from that figure.

FFG's Balance Sheet as of 31/12/17 indicates they had $6m of Total Liabilities.

Secondly, if a company has $50m in Assets but is poorly run and is not profitable, e.g. burning through millions of dollars per year, then you would not value the company at $50m because soon assets will need to be liquidated to cover operational costs and debt/liabilities.

Now back to FFG's latest quarterly statement of cashflows ending 31/03/18, the company's proceeds or loss for cash for the period came in at $2m loss.

If this quarterly cash flow was to continue for the entire year, they would be losing $8m in cash or cash equivalents per annum.

So hopefully this information serves you well and you can see why Book Value (Asset Value) rarely equals the exact Price Value (Market Capitalisation) of the company.