Q:

How do you calculate market value of equity?

A:

Quick Answer

According to Investopedia, the market value of equity is calculated by multiplying the number of a company's outstanding shares by the current price for which the stock is sold. If either the price of the stock or the number of outstanding shares changes, so does the market value of equity.

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Full Answer

Investopedia defines market value of equity as the total market value, in dollars, of all of the shares of a company that are outstanding. The market value of equity differs from the book value of equity due to the fact the market value does not account for the growth potential of the company.

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