For many companies, especially

service companies, human capital is more important than physical capital as an

operating asset.

Book value represents the

historical purchase cost of assets as well as accumulated accounting

depreciation expenses. Inflation and technological changes can drive a wedge

between the book value and market value of assets.

Since book value is a

cumulative figure derived from the balance sheet over several years, it is more

likely to be positive than EPS, which reflects performance over a single year.