iPad vendor pulls ahead on market value

Apple worth more than Microsoft

Apple’s market value has overtaken that of Microsoft, pushing the Cupertino-based vendor ahead of its long term rival for the first time.

According to the Financial Times, the New York stock exchange closed last night with Apple’s market value at $222 billion, while Microsoft stood at $219 billion.

Market value is calculated by balancing the company’s market capitalisation – the value of a company’s business balanced against any debt that it might hold – and factors in any extra cash that it might hold to give an indication of how much an investor would have to pay to buy the company.

So, for example a company worth £100 million with £30 million of extra capital would have a market value of £70 million, as the initial outlay of £100 million to buy the company would be partially recovered by the acquisition of the extra capital.

Since Apple famously insists on operating in the black, its market capitalisation is not pulled back by outstanding debt. In addition, its market value is further aided by the fact that any additional funds are invested in to saving accounts, classified as long-term investments.

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