How To Calculate Stock Prices ?
The price of a single share is primarily decided by the traders. This price is based on what the traders perceive is the value of the share. The value is affected by many factors that include the performance of the company and the economy of the country. This is the reason why shares prices tend to fluctuate. In addition, the price is also dependent on the buy-and-sell demand. If there is a demand for the stock of a company, more buyers will want to buy it. Hence, the price increases. Given the fluctuation, it always makes sense to calculate stock prices to get an estimate. |
While there are several methods to calculate stock prices, one can also use a formula to figure out what the company is worth if it were to be sold in current times. (See Reference 1) The formula for using this approach to calculate stock prices is as follows:
Price per share = Future earning + Assets - Liabilities / Number of shares
When a person wants to buy stock of a company, it is important to know how much cash, assets and debts the company has accumulated. In addition, the investor should also figure out what profits the company is making, and how much profit they will make in the future. Usually, estimating future profits is difficult as it requires estimates. (See Reference 1)
In order to put in the figures into the formula, you have to check the information released by the company. Typically, companies that trade publicly are legally bound to divulge their numbers. This is done every quarter and then a consolidated report is released at the end of the financial year. Hence, you can access the financial report and get the required numbers to put into the formula, and you will be able to calculate the price of each share. (See Reference 1)
**More Articles :**
1. EzineArticles: How To Calculate A Stock Price
https://ezinearticles.com/?How-to-Calculate-a-Stock-Price&id=2589837 |