How to Calculate the Market Value of a Firm's Equity

by Bryan Keythman

The market value of a firm's equity, which differs from the accounting value of equity, is the total value of stockholders' ownership in the company based on the price investors are willing to pay for the company's stock on the open market. Because stockholders are entitled to a share of a company's future earnings, a company's market value rises and falls based on investors' expectations of a company's future earning power, among other factors. If you know a company's stock price per share, you can calculate its market value of equity, which is also called market capitalization.

Visit any financial website that provides stock quote information, such as Yahoo Finance, MSN Money or DailyFinance.

Type a public company's name or ticker symbol in the appropriate text box required to search for the company's stock information. Click the appropriate button, such as "Search" or "Get Quote," that is located next to the text box. A ticker symbol is typically one or more capital letters related to the company's name or business, such as the ticker symbol "XYZ" for XYZ Company.

Find the number of shares outstanding of the firm's common stock. For example, assume a company has 1 million shares outstanding.

Multiply the company's number of shares outstanding by its stock price per share to calculate the market value of its equity. In this example, multiply 1 million shares outstanding by $10 per share to get a $10 million market value of equity.

Tip

  • Monitor the market value of equity of your stocks. An increasing market value of equity means your stock's value is rising.

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