PSN still makes more money than the entirety of Nintendo Co., Ltd.

[VideoGameAccountant]

outlawauron said:

Cerebralbore101 said:

I had a financials course in college, and that is indeed how a company's worth is determined. Total Assets - Total Liabilities = Company value. 

I'll have to look over the OP's documents later. I'll edit my post to accurately reflect the real difference between the two gaming divisions. 

Edit: Yeah, I see what you mean. That widens the gap between Sony's Gaming Division and Nintendo to 33 billion yen. 

What?! That's not how companies get valuated. Maybe internally, but to critics (like Forbes who make those lists) and investors, it's easy to see that it's not the case.

What he described is book value per share. Its a good measure since it, in essence, the amount the company is worth if you liquidated all its assets. If you are looking at a stock, it may not be bad to know since you can tell if the market is vastly overvaluing or undervaluing. 

There are two reasons that the book value and the market value are different. First, per GAAP, assets are measured at historical cost, with some exceptions. This means if you have, say, a building that you've owned for 30 years and has appreciated in value, it would still be recorded at price you bought it. The other is that there are some nontangibles the company may have that can't be booked. For instance, a company could have an amazing brand that makes it more valuable than what the financial statements are showing. In the stock market, future potential plays a lot into the price as well.