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Market Capitalisation (Factors influencing share prices of PLCs (Private…
Market Capitalisation
Factors influencing share prices of PLCs
Private company share prices rarely change
Private company value determined when being bought / sold or when new shareholders are introduced
Share prices of public companies fluctuate every second while the stock markets are open
Market Capitalisation
Definition
Company value determined by price of shares (bought and sold)
Common term for total value of a company is
Market Capitalisation
Represents the
total market value of the issued share capital of the company
Sum
Share price (per share) x Number of shares in issue
Factors for Share Prices
Factors within the company's control
Financial performance
Dividend policy
Relationship with key investors
Management reputation
Factors outside the company's control
State of the economy
General market sentiment (what people are generally investing in at a particular time)
Is the company a takeover target?
Alternative investment in the company's sector (disruptive technology - someone is shaking the market up with advances other companies do not have / cannot do
Market Expectations
Share prices quoted influences by market expectation of business performance
Warnings indicating expectations won't be met result in share price fall (profits warning)