For your first question, based on my understanding, Book Value gives an understanding of how much capital does the entity have. In cases of financial institutions, it gives an idea of how much they can lend (I think RBI gives the definition of how much leverage one can do based on the book value).
So as book value increases the entity can get more leverage and accordingly lend more. This brings in more volume lead yield.
In some sense, AUM growth is also linked to the book value as well as the equity. Since equity is part of what is being lent.
So, if we know the rate at which the AUM grows or book value (ROA) is growing, we can understand how much more leverage is possible in future. So you’ll see expected P/B forcast being done.
An eg: If current P/B is 2 but historically the entity traded at P/B of 3 we can say (after more analysis on P/E, ROA, etc) that the firm maybe undervalued.
Hope I clarified your doubt. Also, please correct me if I’m wrong. I’ve just started learning the finance sector.
Cheers
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