how do you figure out what the cash value is of a stock? that would be using the balance sheet?

Question

if a stock is trading today at 22.00 usd, how can one figure out what the cash value is of the stock by way of the balance sheet.. can someone do an example

Answer 1

Owners' equity = Assets - Liabilities. OE is the value of the stock shares that are outstanding. In order to compare that to the stock price, you have to know how many shares are outstanding. You divide that number into the OE to get your cash value.

At least that's how it seems to me, logically. But it's been a very long time since I took any accounting courses, so that might not be quite right.

Answer 2

Even looking at a balance sheet, it is still impossible to tell the book value of the stock compared to its trading value.Why? Because certain assets on the balance sheet as recorded therein may have a "real" value at more than what is recorded (or less depending on the circumstances). Such as real estate the company owns, due to depreciation, the book value of same may be quite lower than its current market value. Also, there is "goodwill". Mostly, this is often recorded as $1.00, but in truth, it may have some value to any potential buyer or business. I have been a Banker for 40 years in the Credit/Lending field and can give you an example. Back in the early 70's, in fact it was in 1968, Ford was about to produce a new car called the Pinto. I had a client in the auto parts field who held a patent on the name Pinto for his mufflers. Since it was auto related, it was discovered by Ford when they were doing their investigation of the name through the patent office. As a result, Ford approached him and asked if he would sell them the patent on the muffler name so they would have clear ownership of anything called "Pinto". They paid him $100,000 for the name and since it was on his books for $1.00, a great profit was made. While such a thing is rare, it does happen periodically.

Answer 3

divide the total Equity by the number of shares outstanding.

balance sheet equity 1,000
Outstanding shares 500
cash value p/share 2