This workout asks us to look at Apple's balance sheet and to calculate the book value per share of the company as at September 30th, 2023. And then it gives us underneath an extract of Apple's accounts showing their balance sheet as at the end of September 2023. The second question asks us to compare the book value that we calculate to the current market price of Apple shares of $171.21. So as we look down the balance sheet, there are a few things to take notice of. The first, in the top of the balance sheet in this section says, be careful all of the amounts are listed in millions of dollars except for the number of shares which are reflected in thousands. So we may need to be a little bit careful with our decimal points so that we are being consistent. So as we scroll down the balance sheet, we can see all the extracts of their assets and their liabilities. As you get down to the bottom section to the equity section, there are two figures that are really important to us. First is a description of the number of shares that have been issued, authorized and are outstanding. And then the second number is this figure here, total shareholders equity, which is the total of all of the value of the shares from a book perspective. So we can scroll down a little bit and we can calculate the total shareholders' equity.

Now this is relatively easy to do. We point up to this figure here, the 62,146, but you'll remember that this was given in millions. So we need two. So we're being consistent. We need to multiply that by a million, and that gives us a figure of $62.146 billion of shareholders equity. The next thing we need to do is we need to find the number of shares outstanding. And you can see it's this figure here, 15,550,061, but you might remember that that figure it told us was in thousands, thousands of shares. So when we key that number in, because it's just within text, we have to re-key that number. So we go 15,550,061

And then we need to multiply that figure by a thousand to get it into the total number of shares, and we end up with 15.5 billion shares.

And then we can simply divide one of these figures by the other. We can divide the equity by the number of shares, and that will give us the book value of each share. And that gives us a figure of $4 per share. Now you'll remember, if I scroll to the top, you can see it again that the current share price is $171, which is obviously far, far in excess of the book value of Apple's shares of only only $4. So why is that? Well, there were three principle reasons why it tends to be a much higher market value than book value, particularly for tech stocks such as Apple. The first is future growth expectation.

The book value simply reflects how Apple got here, the historic transactions, the summary of all the historic transactions that got Apple's financial accounts to this particular point, whereas the market is looking forward looking at Apple's anticipated growth, anticipated revenue and profit generation, and particularly looking at how much cash they're going to generate, which in turn will enable them to grow their share by reinvesting or alternatively enable them to pay out dividends to those shareholders. The second reason why market value is often significantly higher than book value is intangible assets.

Tech companies such as a Apple often have significant intangible assets that are either not or not fully reflected in their balance sheet. So things like their very strong brand, customer loyalty and so on, which don't have a financial value in the balance sheet, but have a very real value in terms of their ability to attract customers and persuade those customers to buy their products.

And the final reason is market conditions. And this just depends on the sentiment of the stock market at a given point in time. And the market may be very positive about a particular sector such as tech stocks like Apple and therefore may be valuing those very highly because of a certain amount of enthusiasm for those businesses within that sector.