Stock Valuation Methods

Abstract

The evaluation of an entity is used by financial market participants to establish the price which they want to pay for or to receive from the sale of a business. Nowadays, Romania has 350 listed companies and the number is increasing. The present article focuses on the market capitalization, stock evaluation methods, the phases of this evaluation, as well as its benefits and limitations. The dynamic methods of evaluation focus more on the company’s future rather than its current situation. An investor is more concerned with the future and the profitability of a business than with its past and current activity. Market capitalization, often referred to as market cap, is a simple, straightforward method to calculate a company’s size and value, and consequently, its potential growth rate and risk outlook.

Keywords

• entity value
• evaluation
• listed companies
• investor
• market capitalization
• stock market methods