How to Put a Value on the Worth of a Company Business

Use the market value and the book value to find company worth.

The world of finance and accounting has two different values: the market value and the accounting value. The stock market is based on demand, and so prices are constantly updating and changing. While the market price of a public company provides a good indication of how the market values a business, it does not tell you the actual value of business assets. That actual value is the difference between assets and liabilities.

Instructions

1. Obtain the company's annual report. You can usually download this from the company's website or request one directly from the company's investor relations department.

2. Turn to the balance sheet. This provides a listing of the company's assets and liabilities. The difference between assets and liabilities is referred to as stockholders' equity or book value.

3. Calculate the intrinsic or book worth of the company. Subtract liabilities from assets for the book value of assets. This is the amount the company is currently worth, minus any liabilities or debts associated with purchasing those assets.

4. Calculate the market worth. If the company is public, it will most likely have a stock price. Multiply the stock price by the number of shares outstanding for the market capitalization. If the company isn't public, use the stock price of competing companies as a gauge.

References

• Stock Market Investors: What Is Market Capitalization?