

Apple's market cap surpasses Microsoft in its 1990s hey-day












Sources: CNN Money, CJR

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RE: Confusion about size of companies
By Mizerable on 8/21/2012 12:31:25 PM , Rating: 3
I don't know why people don't understand this but market capitalization is the value of the company's equity, it DOES NOT INCLUDE DEBT.

Walmart and Exxon have LOTS of debt and their total assets are MUCH larger than Apple.

Again, a company could be GIANT but it could also OWE alot of money, so the debt is very high and there is no equity. But SOMEBODY (the creditors to the company) do indeed own much value in the company in the form of debt.

The key here is that Apple has very little debt while Exxon has lots of debt.

Therefore, the most important measure is ENTERPRISE VALUE, not market cap.

RE: Confusion about size of companies
By 91TTZ on 8/21/2012 1:11:48 PM , Rating: 3

Then why do people refer to the US economy as being the world's largest? If they rate government economies the same way they rate company economies, then the US would have one of the world's smallest since we have so much debt.

By Mizerable on 8/21/2012 2:36:55 PM , Rating: 2
You can't measure a country's economy like you can a company...

We measure country economic size by how much it produces in one year. by analogy for companies that would be its "profit", there are many ways to define and account for profit... but by that measure exxon is the biggest every single motherf****** year.

the reason apple's equity is worth more be because people expect apple to grow more than exxon in the future, and also because exxon has far more debt ,,

again, debt is only negative value for the EQUITY holder, debt itself is very valuable of course, wouldn't you like to own all the debt a company has outstanding ? that's a lot of money.

so for the us economy, the lenders and equity owners of all the companies in the economy together hold the value of the economy, which is indeed the largest,

By Mizerable on 8/21/2012 2:38:35 PM , Rating: 2
so in other words, the measure we call "the biggest" for companies and economies is TOTALLY different,

