The price of shares of a company is determined by the dealers in the market. This price is a perceived value of the operators who are in many ways as good of society and the economy suffers. That is one reason why the prices vary so much. Another important factor is to buy or sell request. If a company is a craft hot, then a herd of buyers offering for sale of shares could overwhelm what the price will be temporarilytop.
Formula
Since stock prices are all over the place can sometimes be useful to calculate an ideal price estimate. There are many ways of doing, but the method is the approach that the entire company is worth if sold today. Here's the basic formula:
= Price per share (Earnings + Future Activities - Liabilities) / Number of shares
If you have a job, you want to know how much money to buy wealth, and the sense of guilt that they had setwith how much profit they make. It would also be useful to know how do a few years on the road. This is the hardest part of the calculation, because they have an estimated guess.
To find the numbers
Listed companies are required to meet their numbers every financial quarter, so that information on most major financial sites like Yahoo are available! Finance.
Example - XYZ company per quarter1:
Capital: 33.5 billion U.S. dollars (in the accounts as the sum of activities found)
Liabilities: $ 3.7 billion (in the accounts as the sum of liabilities found)
Number of shares: 315.9 million (market capitalization divided by current price)
The result for 2006: 3.1 billion dollars (in the profit and loss for the year as found)
The result for the year 2007: 4.2 billion U.S. dollars
The result for 2008: 4.2 billion U.S. dollars
The outcome for 2009 +: $ (4.0 to 5.0 billion which it is) to guess
FutureEarnings: $ 90.0 billion (20 years) to 4.5 billion dollars
Price per share = $ 379.23 = ($ 90.0 billion to 33.5 billion U.S. dollars - $ 3.7 billion) / 315.9 million
The result is certainly the future more difficult number to come. With a great sound society, you 15-25 a decade of use in the calculation, since a P / E (price earnings) 15-25 is very common. If the company you are not sure, it is possible 5 to 10 years. The number to use is based on how longmay think, the company continues to produce these results. And of course you have, how much profit guessed in each of those years.
When you factor in a P / E of 30 instead of 20, which would give us a price of $ 521.68. This shows how important the number of years. Note that the number of years is not only important, but so is the result of a year. With the United States is currently in a recession, companies could not be expected to increase much over the next two years, so that should bebe taken in.
Sometimes this method is very accurate (close to the real cost of living) and sometimes it's gone, so as not to leave out one as absolute figures, is just another tool to use when analyzing companies. You can also see at a glance, the Company P / E to determine whether it is in "normal" range.