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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › market value of share
Sorry sir I need to know normally market value of share is calculated as
NV=pe ratio *EPS
But if EPS is not given how we do that it is simple but I cannot get my head round
There are several ways you can be expected to get the market value of a share – it depends what information is given in the question (and what is asked)!
One way is an asset value. i.e. the total value of the net assets, divided by the number of shares.
Another way, (and theoretically the best way), is to use the growth formula on the formula sheet and calculate it based on expected future dividends and required return.
A third way is to use PE ratios, in which case what you typed is correct. If you are expected to use this approach then you will be told either the EPS or the total earnings (in which case you will divide it by the number of shares).
What is the difference between term price and current price and from which year we add inflation sorry I am confuse.
Thanks for previous answer
You are welcome for the previous answer.
Now you have confused me however! Term price and current price have nothing to do with the market values of shares. The expression ‘term price’ will not be used in the exam. The term ‘current price’ is likely to be used in a DCF question and is the price or cost now. Therefore in a DCF investment appraisal question, if the flow is in 1 years time you will add one years inflation to the current price (and 2 years inflation at time 2 and so on).
(Please in future if you want to ask a question on a different topic then create a new topic so that everyone can benefit from it 🙂 )
i am sorry this question was about DCF I forget to put the topic
That’s OK 🙂