Friday, 23 April 2010

How much should you pay for a business? Valuing a company (4)

Market capitalisation

The value of a company can be ascertained by multiplying the number of issued shares by the current share price. This is known as market capitalisation.

A case for asset stripping? 
  • The concept of asset stripping is to buy out a company's shares for less than the value of the assets and then to sell these at a profit. 
  • This is why company directors get worried when their share price falls too low!


Also read:

Valuing a company (1)

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