CNET.com - "Why Microsoft Should Aquire Sony's Gaming Division"

[Ail]

Million said:

Ail said:

Million said:

@ Rocket Please stop your killing an interesting topic

 

So would it be possible for a business to have a high market cap with few assets if it was making alot of profit and projected to make profit for  the forseeable future ?

 

 You just defined Google :) ( and most profitables software companies out there).

 

 

Ahh Internet based business came to mind when I was thinking about that. So who would determine that a business would be profitable for the forseeable future , is there a calculation for it ?.

I'm confused that Assets:Profitability ratio would be used as a standard if businesses like google exist , isn't it unfair ?

 

That's why there isn't a formula that will give you a company stock price based on it's book and profit.

Depending what company your compare you have to use different ratio. ( Price/Earning, Price/Book).

And when comparign companies there are actually a lot of factors that come into play...

 

There's risks in company that are worth a lot more than their assets too. Lets say the company tanks, if you have a lot of assets you can sell them and get back some cash.

No assets means nothing to sell so you are really screwed.

 

Assets usually means very little for company dealing in immaterial stuff like Intellectual Property. ( most software companies).