In order to calculate the equity value, we need to multiply two things together.

The first of these is the traded share price.

The second thing is that number of shares. So I've got the price per one share.

I then multiplied by all of the shares that exist and what I get to is the equity value. Now, we do have some other terms we could use instead, it could be known as the market value or market capitalization or market cap.

A question mark arises around the number of shares.

Am I going to use the average number of shares over the last period or the number of shares at the end of the period? I e the most recent number of shares? If I open up a company's set of accounts, I can very often find both average shares over the period or the number of shares at the end of the period. Well, I want to try and find the equity value today, and that means I need to get to a number of shares as close as I can to today.

Thus, it's going to be the number of shares at the end of the period.

I do not want the average number of shares at all. The second question mark, on the number of shares, do I want the basic number of shares or the diluted number of shares will we want the diluted number of shares? This will include all potential shares that could exist in the future.

These are very likely to exist. Therefore, the share price has priced in this expansion of shares in the future already.

So my equity value is going to be the traded share price times by the diluted number of shares at the end of the period.

If the number of shares outstanding isn't explicitly given, you can sometimes calculate it.

What you are looking for here is the number of shares issued minus the treasury stock or the number of shares in treasury stock.

That will give you a number of shares outstanding, which can then be multiplied by the trader share price to get to equity value.