Capital share price

Consolidation has also created a pattern of aggressive and capital-intensive product acquisitions in recent years. These have, in turn, resulted in reduced credit ratings for many firms, stock share price declines, and most importantly, significant standing debts.This debt is further aggravated by plant closures and... 

Market capitalization The product of the number of shares of common stock outstanding and the share price. 

Capital market valuation (share price) reflects aggregate assessment by current and prospective shareholders of future fundamental creation... 

Short-term profit volatility and analysts forecasts, then, have much less impact on a company s share price than is often assumed. Capital markets have a longer-term perspective. Furthermore, in an industry like chemicals, even if we assume a continuous improvement in fundamental performance, the attempt to generate an equally continuous, volatility-free growth in profits will be virtually impossible because of structural factors like feedstock volatility, currency exposure, and seasonal effects. Chemical companies should learn to live with earnings surprises and concentrate instead on communicating a concrete long-term strategy - and of course deliver appropriately on capital market expectations, which will be correctly set on this basis. 

Investor relations should therefore actively sell its product to its divergent sets of key customers - which requires a much more systematic approach, incorporating insights from product marketing. We do not claim that this approach boosts a company s share price above the fundamentally justified level, but it is the right approach to mitigate temporary deviations and ensure that the fundamental value is fully reflected in its capital market valuation. 

The simplest method of valuation starts from the obvious fact that to buy a company, one just has to buy all the outstanding shares. In principle, therefore, the value of the company is the number of shares multiplied by their individual value at any moment (the capitalization ). Almost certainly the offered price will have to exceed the current share price to persuade people to sell their shares (unless the market is falling, in which case they may be glad to offload them). There may also have to be a premium on the capitalization to allow for intangibles, such as goodwill . 

The normal method of calculation for company funds is to use the capital asset pricing model (CAPM). This was developed by share analysts keen to have a defence against accusations of negligence in selecting shares for clients as a means of assessing the real value of any share, in the form of risk and desirability. It essentially demonstrates one version of the direct proportionality between risk and return. 

A disadvantage of issuing convertibles is apparent when the company experiences a significant rise in its share price in this case, the interest cost may turn out to have been prohibitive and the company would have gained if it had issued shares directly. This, however, is known only in hindsight. The same occurs if there is a substantial drop in the share price after convertibles have been issued here, there is no incentive for bondholders to convert and the company is left with debt on its balance sheet until maturity, when it might have expected to have converted them to equity capital. 

What is value Value can be defined in different ways. There are those who might classify value in the short term in two main categories book value and market value. A company s financial statements determine its book value. The book value of assets and stockholder s equity can be ascertained from the balance sheet. Recall from earlier chapters that stockholder s equity is the difference between assets and liabilities. Market value, commonly referred to as market capitalization, is calculated by taking the number of shares outstanding times the share price. Market value changes multiple times per day, every day. When concentrating on the number of shares and share price, this refers to a company s market value of equity. 

Not all the shares in a company may, or need to be, issued. By the issue of more shares, at an appropriate stage in the company s growth, capital may be raised from the institutions mentioned above or, through a flotation on the Stock Exchange, from the investing public at large. When this happens, the price paid per share by the purchasers may be many times greater than the nominal value. 

The central issue in any stock offering is price. In traditional, profitable companies price is usually measured as a price/earnings ratio. Since biotech companies rarely are profitable, price is evaluated using the capitalized value of the outstanding stock, i.e., price per share times the total number of shares, compared to other companies at similar stages of development with comparable upside potential. This "market cap" number (either private or public) is what sophisticated biotech investors look to in measuring whether an offering price is fair. Two measures used are postmoney and premoney values. 

The capital cost of STPs is one quarter to a half of that of PV power plant (Table 1). The LEC is defined by the total cost, [(capital cost)x(fixed charge rate) + O M + fuel cost], per annual net electricity production in kWh. It varies depending on the plant scale and solar share. The LEC ranges between 0.05kWh and 0.12/kWh for the STP, and attains 0.4/kWh- l/kWh for PV electricity. Thus, the solar H2 production cost by PV and STP electricity is not comparable in terms of capital cost and LEC. However, the cost of STP electricity is still not competitive with that of a conventional coal-fired power plant. To close the price gap, the solar thermal parabohc trough power plant industry has introduced integrated solar combined cycle systems (ISCCS) which are able to offer a competitive base-load electricity cost of 0.05-0.07/kWh at solar shares of 15-25% [7] (Fig.l). 

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