What is the wealth of a company?

Question

I would like to better understand what is the wealth of a company and what is made of.

Is the wealth of a company similar to GDP of country, like a "gross company product" ?

As example: can we say GDP as total market value of good a services produced by a country in a certain amount of time, and wealth of a company is the market value of assets and services produced in a certain amount of time?

Could the two measures be compared ? Or is the market value of a company conceptually a different thing than a "gross company product" ?

Answer 1

The "wealth" of a company is not a well-defined term. The worth of a company, its market value, is whatever someone is willing to pay for it. The market's best guess of that value, for listed companies, is equal to the share price multiplied by the number of shares in circulation. In theory, for both listed and unlisted companies, the worth of a company is equal to the sum of of all discounted future cashflows arising from the company.

As such, it is a stock variable, not a flow variable.

Conversely, the GDP of the country is a flow variable, not a stock variable. It's the total value of transactions in the economy in a year; as such, it's somewhat analagous to a company's turnover.