Market value weights — Accounting glossary

Market-value weights reflect the economic amounts investors currently commit to the company's securities. Equity market value normally equals the number of ordinary shares multiplied by the ex-dividend share price. Traded debt value comes from its quoted price and the nominal amount outstanding, with the quotation basis observed. Book reserves are already reflected in the total equity market value and are not added again. For untraded finance, a reasonable market-value estimate may be required. State whether debt/equity or debt/total-finance is being calculated, because they give different percentages.

Worked example

There are 2 million shares at $3, giving equity value $6 million. Debt with $4 million nominal value trades at 90 per $100 nominal, giving debt value $3.6 million. The debt weight is 3.6/9.6 = 37.5%; debt/equity is 60%.

Common mistake

Using a debt/equity ratio directly as the debt weight in WACC, or confusing nominal debt value with market value.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	AFM	Supporting	September 2026–June 2027
ACCA	FM	Direct	September 2026–June 2027