what is value 
value is the monetary material or assessed worth of an asset good or service value is attached to a myriad of concepts including shareholder value the value of a firm fair value and market value some of the terms are well known business jargon and some are formal terms for accounting and auditing standards of reporting to the securities and exchange commission sec understanding valuevalue can mean a quantity or number but in finance it s often used to determine the worth of an asset a company and its financial performance investors stock analysts and company executives estimate and forecast the value of a company based on numerous financial metrics companies can be valued based on how much profit they generate on a per share basis meaning the profit divided by how many equity shares are outstanding the process of calculating and assigning a value to a company or an asset is a process called valuation however the term valuation is also used to assign a fair value for a company s stock price equity analysts that work for investment banks often calculate a valuation for a company to determine whether it s fairly valued undervalued or overvalued based on the financial performance as it relates to the current stock price comparing the different values and valuations of a company to other companies within the same industry can help with determining investment opportunities for example if the value of a firm is estimated at 50 per share but the stock is trading at 35 per share in the market an investor might consider buying the stock on the other hand if the stock is trading at 85 per share far above the perceived value the investor could consider selling or shorting the stock below are some common uses for the term value in finance and in the stock market a company s market value represents the value according to market participants in the stock market in stock valuation market value is typically synonymous with the term market capitalization market cap is merely the share price of a company multiplied by the total number of outstanding shares book value is the value of a company according to its financial statements or accounting books book value represents the total amount of money remaining if the company liquidated or sold all of its assets and paid off all of its financial obligations such as debts or liabilities a value stock is a company s stock that trades at a lower price when considering its financial performance and fundamentals which could include earnings or profit performance dividends which are cash payments to shareholders and revenue generated from sales typically investors searching for well run companies that trade at a discount are called value investors enterprise value is the total value of a company which includes a company s cash on its balance sheet short term and long term debt as the market capitalization of the company the enterprise value of a company shows how well the management team uses its capital which is financed by debt and issuing equity shares in calculating the valuation of a company and its stock price investors often analyze financial data but the interpretation of that data can vary greatly between investors making valuation analysis both an art and a science there are many other uses for the term value that go beyond the stock market real estate and homes have a value associated with them within a situation something or someone could add value or be value added value added describes the enhancement to a product or service by a company such as an extra feature or benefit the goal is to increase the value of the product or service being offered the term value proposition is used in the corporate world to represent a company s promise to its customers that they ll deliver the product or service as a result of doing business with them net asset value nav represents the net value of a company or investment which is calculated by subtracting the total amount of assets by the total amount of liabilities net asset value is typically used with investment funds containing a basket of securities such as mutual funds valuation of a companythe term value can also be applied to the value of a company versus the valuation of a company although value and valuation are often used interchangeably the value of a firm is a number while valuation is expressed as a multiple to earnings earnings before interest and taxes ebit or cash flow earnings represent the profit or net income generated by a company cash flow represents the inflows credits or outflows debits to the cash position of a company during an accounting period there are various methods that investors use to value a company depending on what they believe is more important some investors use the cash a company generates by applying discounted cash flow dcf analysis the dcf method attempts to forecast or estimate the future cash flows of a company if a company can generate cash it can meet its debt obligations invest in the company or pay dividends in other words dcf analysis attempts to determine an investment s value today based on projections of the cash generated in the future 