How do you derive the share price from equity value in the valuation bridge?

How do you derive the share price from equity value in the valuation bridge?

• A. Divide equity value by number of shares outstanding
• B. Subtract taxes from equity value
• C. Multiply equity value by shares
• D. Add cash to equity value

Answer: (A)

Equity value represents the total value of all outstanding shares. The price per share is simply what one share would cost, so you divide the total equity value by the number of shares outstanding. If there could be dilution, use fully diluted shares to reflect potential new shares. The other options don’t yield a per‑share price: subtracting taxes from equity value isn’t about price, multiplying by the number of shares multiplies instead of divides, and adding cash changes the overall value concept (from equity value toward enterprise value) rather than producing a per‑share price.

Equity value represents the total value of all outstanding shares. The price per share is simply what one share would cost, so you divide the total equity value by the number of shares outstanding. If there could be dilution, use fully diluted shares to reflect potential new shares. The other options don’t yield a per‑share price: subtracting taxes from equity value isn’t about price, multiplying by the number of shares multiplies instead of divides, and adding cash changes the overall value concept (from equity value toward enterprise value) rather than producing a per‑share price.