Redefining Horizons

  Market Value Market capitalisation is the total value of the company’s outstanding shares. While ‘face value’ is the value at which the share was originally floated, share value, is perception and supply-demand driven. Trust and expectations of the shareholders dictate perceived worth. Better the perception, more demand against finite availability which increases price and market cap. Often detached from fundamentals and sometimes devoid of rationale, share market has its own dynamics. Prices could fluctuate for no valid reasons. Experts explain it away as ‘sentiments”. Sentiments and fluctuations apart, the factors that determine market cap are ‘number of outstanding shares’ and individual ‘share value’. Companies could also own shares other than outstanding shares.   These are called treasury shares Treasury shares could be those which the company reserved for itself or bought back or even those which remained unsubscribed. As long as they remain treasury shares, these...