What is the stock price?
The stock price is a value placed on the company's shares. Organizations will sell shares of shares to increase capital reserves through investment in capital. Companies will initially undergo a process known as the initial public offer. The subscriber will place the initial price of shares per stock on the basis of current market conditions and the current financial situation of the company. After the initial offer, the company's shares will rise and will decrease on the basis of demand for the company's shares. The subscriber will often review past shares problems for similar companies and check the current market conditions before issuing the company. From this information, the subscriber will come up with the scope of stock price, such as $ 12 (USD) to $ 15. This provides a potential buyer's idea of how much they pay for the purchase of shares. If high demand is available for the new supply, the stock price may increase tremendously throughout the day of release because more investors long for stocksof the company.
While the price listed on the stock exchange is the market price for which investors buy and sell shares, this does not necessarily have the accounting value of the company's shares. Investors often compare the accounting value per share with a market value per share to determine whether there is a bonus. For example, the company has $ 1,000,000 USD in total assets, $ 500,000 in total obligations and 100,000 shares of outstanding shares. The accounting value of the company's shares is $ 5. If the current price of shares on the market exchange is $ 7.50, then the company's shares are traded with a bonus of $ 2.50 compared to the accounting value. The company that is a stock is less than the accounting value is not generally considered to be a good investment.
Another look at the price of the shares is the price of a multiple on whakcia are awarded. The common formula for calculating this number is the ratio of the price to earnings, which is the market price of shares divided by profit per share. For exampleAD shares with a market value of $ 45 and the current quarterly profit per share $ 2.50 means that a multiple of shares is 18. If the company reports its next quarterly profit as $ 2.75, the investor can more than $ 18.50, resulting in $ 49.50.