The Myth:
If the balance sheet looks strong, the business must be valuable.

The Reality:
Book value reflects historical costs, not economic value. A company with strong book assets but poor profitability could be worth much less than its recorded net assets.

Why It Matters:
Relying solely on book value ignores the critical driver of business worth: future cash flow.

Practical Tip:
Assess earnings power and market conditions — not just asset totals — when valuing a business.