What is market value?
The term market value refers to a company’s or an asset’s worth in the financial market. A company’s market value is the price that investors are ready to pay for its shares.
In simpler terms, the market value of a company is influenced by how investors view its potential. The greater a company’s estimated worth, the greater is its market value.
Mathematically, market value can be arrived at using different methods, such as price/cash ratio, dividend yield ratio, P/E ratio, EPS, market value per share, book value per share, etc.
As an investor, you should know that market value fluctuates considerably with time. It depends on numerous factors like growth potential, supply and demand graph of a stock, choice of valuation methods, and whether a stock is reasonably priced or not.
