How to calculate share prices

Written by james collins
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Stocks represent a unit of ownership in a public company. In general, an increase in demand for the stock also increases the stock price. One calculation analysts use to measure the amount of stock issued for a company is market capitalisation, also known as market cap. Analysts also use market capitalisation to compare company size. A company with a large market capitalisation is owned by a large group of stockholders and vice versa. You can calculate the current stock price of the company if you know the market capitalisation and the number of shares outstanding.

Skill level:
Moderate

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Instructions

  1. 1

    Look up the current market capitalisation for the company. You can find this on your favourite investment website or by asking your stock broker. Let's say you own Stock XYZ and it has a market capitalisation of £65 million.

  2. 2

    Look up the number of stocks that are outstanding for the company. This figure is available on the company's balance sheet which can be found in the company's most recent annual report. The annual report is usually available to investors on the company website or by requesting one through the investor relations department. Let's say the number of stocks outstanding for the company is 1 million.

  3. 3

    Calculate the share price. Divide the market capitalisation by the current number of stocks outstanding. For this example, the calculation is £65 million divided by 1 million which is £65.

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