Essay: The intrinsic value of stock is the real value of a stock

The intrinsic value of stock is the real value of a stock. The true value of a stock is achieved by subtracting the liabilities of an asset from the assets. Among the factors that are employed when determining the intrinsic value of a stock are the annual growth rate and earnings per share (Tyson, 2005).

The enterprise value is determined through market capitalization. The enterprise value takes into account the debts of a firm. Among the factors that determine the enterprise value is the market cap, debt, preferred stock among others. Market cap is the actual price of a firm, which is used to determine whether a firm is small, mid or mega.

It is imperative to note that there are no exact criteria to determine the exact price of a stock. However, the above three factors are the most critical components that investors need to be considered.

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