MARKET VALUE OF EQUITY: The fair market value of the outstanding share of the company. This is used when the company is a publicly traded company, i.e. listed in the stock market, hence the term "market value." In this sense, the market value of equity also reflects the market sentiment (investor's perception) of the company's worth as a whole and down to per share level. Market value is determined by:

(1)   MV = P / S

... P = current stock price in the market; and S = number of outstanding share.

BOOK VALUE: If the company is privately held, i.e. not listed in the stock exchange, it may be difficult to determine fairly and accurately the "fair market value of the firm;" therefore, one uses the "book value" to evaluate the value of the firm as a whole and down to per share. Book value is determined by:

(2)   BV = E / S

... where E = value of common equity and S = number of outstanding shares.

ALTMAN Z SCORE: The Altman Z score is used to assess bankruptcy risk of a company. The formula is given by:

(3)   Z = x1T1 + x2T2 + x3T3 + X4T4 + x5T5

... where xi = parameters; T1 = working capital total asset; T2 = retained earnings / total assets; T3 = EBIT / total assets; T4 = market value of equity / total liability; and T5 = sales / total assets. There is a change of definition for T4 when the firm is a private firm: T4 = book value of equity / total liability.

REFERENCES:

[1] Altman, Edward I. (July 2000). "Predicting Financial Distress of Companies". Retrieved on September 4th, 2009 from http://pages.stern.nyu.edu/~ealtman/Zscores.pdf: 15–22.

[2] Altman, Edward I. (September 1968). "Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy". Journal of Finance: 189–209.

Thanks # Paul Louangrath for describing the terms in layman form. My confusion got resolved.

kind regards

Just to clarify, I agree with Paul's explanation on market value of equity.  But I thought in your question you wanted to know the book value of total DEBT, not the book value of equity.  In your question you were correct to identify that the book value of total debt is the value given to borrowings in the liabilities section of the balance sheet. 

Bear in mind Altman's z-score is based on historic empirical data relationships that seem to predict impending insolvency, so the formulas may seem a bit arbitrary and are intended to be interpreted literally.  Those data relationships may not hold true today.  The data may be a little out of date now especially in light of changes to accounting standards (eg IASB) and market pricing following the Global FInancial Crisis. 

1. Market value of equity MV = Market price per share P X Number of issued Ordinary share (Common Stock). It cannot be found in Balance Sheet. It is not the same as Shareholders' Fund.

2. Book value of debt can be found in Balance Sheet i.e Long Term and Current Liabilities. Under the current financial reporting standards, companies may be required to measure their debts at fair value.

So, Market value of equity = market capitalization?

Xing su, yes. Market value of equity = market capitalization.

Thanks Sheetal .. for the interesting question and the very nice responses, particularly the one from Mohd Halim Kadri . So well explained in simple terms. Thanks Sir.

You are welcome Sir.

Thanks Paul. However is it possible to use this formula?

Equity value = Enterprise value – debt and debt equivalent - Non controlling interest – Interest on preferred stock + cash and cash equivalents.

To find the market value of equity for T4 calculation in a private company