Markets · 6 pages · 12 min

Why a share price is not the company's cash

A share price is what traders last agreed, not the cash sitting in the company's accounts.

I understand the following: I can download a file of this brief, and I can also read it in the library on this browser. Clearing the cache or cookies deletes the library copy. The file must be downloaded for access to be retained.

From the opening

A share price is the amount at which a buyer and a seller last agreed to trade one existing share in the market. The company's cash is an asset on its own balance sheet, held in its accounts, and the two numbers answer different questions. The opening covers secondary trades bypass the treasury, market cap is not a cash pile, and new issues do bring the firm cash.

The rest of the brief — the later sections and the reading notes — opens after Stripe confirms payment.

Inside

Secondary trades bypass the treasury
Market cap is not a cash pile
New issues do bring the firm cash
The balance sheet shows the cash
Where the idea stops applying
A distinction worth keeping

Sources

Secondary market equity trading
Market capitalization versus cash

03Reading a balance sheet in one sittingMarkets34 min$22 11What a credit score is countingMarkets28 min$20 0890How a stock is a slice of a companyMarkets12 min$11

Why a share price is not the company's cash

From the opening

Inside

Sources

Also on the desk