How much is a company worth? The worth of a company can be determined in many ways. essentially it is the value shown in the Balance Sheet plus the anticipated future income Assume a company is to close today and it does not owe to others as much as is owed it then whatever is left would be the book value of the company and belongs to the owners
How much is a company worth? • The worth of a company can be determined in many ways. Essentially, it is the value shown in the Balance Sheet plus the anticipated future income. • Assume a company is to close today and it does not owe to others as much as is owed it, then whatever is left would be the book value of the company and belongs to the owners
How much is a company worth? But most companies are bought to keep them going, so the buyers should pay more than the book value because it is assumed they will get more money from operations in the future FUTURE NOW
How much is a company worth? • But most companies are bought to keep them going, so the buyers should pay more than the book value because it is assumed they will get more money from operations in the future. NOW FUTURE
How much is a company worth? With publicly traded companies, the stock market keeps track of how much a company is worth by changing the price of ownershi in a company based upon various factors net income ratios goodw rumors revenues potential market growth eanings
How much is a company worth? • With publicly traded companies, the stock market keeps track of how much a company is worth by changing the price of ownership in a company based upon various factors: – net income - ratios – goodwill - rumors – revenues - potential – market growth - earnings
Summary of Finance Section Basic Reports provide snapshots of company performance where does money come from? owners. investors and operations Where does money go? operations, research development, owners How much is a company worth? The books value plus the value of future earnings
Summary of Finance Section • Basic Reports – provide snapshots of company performance • Where does money come from? – owners, investors and operations • Where does money go? – operations, research & development, owners • How much is a company worth? – The books value plus the value of future earnings