Company value valuations | Business & Finance homework help
The intrinsic value of a company is not directly comparable to its market cap on Yahoo! Finance. Intrinsic value is the estimated true worth of a business, which can be determined using several different methods such as discounted cash flow analysis or the book value approach. This method involves taking into account factors such as underlying assets and liabilities, earnings potential, and future growth prospects in order to come up with an appropriate valuation for the company. On the other hand, market capitalization (or \”market cap\”) is the total dollar value of all shares outstanding for a given company and calculated by multiplying share price with number of outstanding shares. It does not necessarily reflect a company\’s true value but rather represents how investors are currently valuing it based on current share prices in the market.
Intrinsic value takes into consideration many factors that may not be reflected in current stock prices and thus may be higher or lower than its actual market cap—it could even be negative if liabilities exceed assets. Additionally, there may also be discrepancies between intrinsic values determined by different analysts due to differences in assumptions used when calculating them. Therefore, while both metrics provide insight into companies’ overall financial health they should not necessarily be seen as interchangeable when making investment decisions.