Perhaps the best method for estimating the market value of shareholders' equity is to:

Question

Quizplus · Accepted Answer

Multiplying the number of shares outstanding by the current market price per share gives an estimate of the market value of equity. This is because the market value of equity represents the total value that shareholders would receive if the company were to be sold at its current market price. The balance sheet and income statement provide information about the financial health of the company, but do not directly give an estimate of the market value of equity. Adding retained earnings to total liabilities does not provide an accurate estimate of market value of equity, as retained earnings are already included in the equity section of the balance sheet.

Perhaps the Best Method for Estimating the Market Value of Shareholders