The value of every share is printed in front of the shares. Such a value is called as par value or face value of shares. The face value is assigned by the promoters of joint stock company and is given in the memorandum of association. Except the face value, it has also get market value on stock exchange market which may be differ from face value. The market value of a share is determined by the demand and supply. Such a value is affected by the action and opinions of investors and their fear, guess, investment policy etc. Hence, the market price does not reflect the true value of shares and requires a proper valuation of shares. Specially, in the case of private limited company the shares of such a company are not freely purchased and sold to the public. In that case, the valuation becomes absolutely necessary.
The value of shares can be determined in different ways. It can be valued either by taking the earning of a company or net assets that comprise the company. The choice is governed by the reasons for investment.
The value of shares can be determined in different ways. It can be valued either by taking the earning of a company or net assets that comprise the company. The choice is governed by the reasons for investment.