Question

Compute the book value of the stock, and compare it with the stock market value. Explain why the stock market value is higher than its book value.

My company is Tesla (TSLA), how do I do this? What is the analysis? I am using excel.

Answer 1

Solutions:

For the calculation of book value of stock,you can get the required value(i.e.Total assets,Total liablities and No. of Shares) from the balance sheet of TSLA.

Book value of Stock=(Total assets-Total liablities)/No. of Shares

TSLA as on 31.03.2019 has

Total Assets=$34,309 million

Total liablities=$27,691 million

No of shares outstanding=181 million

thus,

Book value of Stock=($34309-$27691)/181

=$36.56

For the Market price of stock you can visit yahoo finance.

Market price of Stock is $753.89

Stock market value of stock is market price of stock.Here,market value is higher than the book value,it means that the stock market is assigning a higher value to the company due to the potential of its assets' earning power.It also indicate that investors believe the company has excellent future prospects for expansion and growth.The performance of the company shows that the value of the company is higher than its book value.