Calculation of a Company's Market Value
Jaap de Jonge (Editor), Editor, Netherlands
Hi Osama, the market value of a firm is what the market thinks is its worth at some point in time.
The (current) market value of a company is calculated by taking the last (=current) stock price of the firm and multiplying that with the number of of the fully diluted outstanding shares in a company. Fully diluted means all shares are included that are owned by the pubic, plus any restricted shares owned by company officers, plus any shares that would be issued if existing convertible bonds and stock options were converted to shares. Shares issued by the company that it has repurchased are not considered outstanding shares.
For example, assuming there are 1,000,000 shares of ABC limited and its price per share is $20, the market value of the ABC limited is $ 20,000,000