Finance: What is a company's intrinsic value?
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What is company's intrinsic value? How does it differ from market value?
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The expert determines what is a company's intrinsic value and how it differs from market value.
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A company has two common values. They are used to define the company from different perspectives. Intrinsic value is the actual value of the company. This is derived from the assets, income and both tangible and intangibles. Intrinsic value is the numbers one takes to the bank when they want a loan or the number that appears on the annual report.
For example, when a banker wants to see where a company stands, (s)he looks at the assets, the income, the expenses and loans along with the equity. This is the value and basis for loaning capital. Countries also use these figures for tax purposes, though they are usually covered by more of the outgoing money than the assets and incoming funds.
Investors can use this valuation to test if the ...
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