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Anorak | Apple is Not worth more than Poland!

Apple is Not worth more than Poland!

by | 29th, February 2012

APPLE is worth more than Poland?! Gaaah. This is the sort of thing that annoys. Nonsense, rubbish, ignorance…

Following an email announcing the iPad 3 launch, Apple’s share value hit an unprecedented $500bn in pre-marketing trading this morning, making the company worth more than Poland and many other things.

OK, so this is all terribly geeky but it just isn’t true to say that because Apple is worth $500 billion and the GDP of Poland is $500 billion then Apple is worth the same as Poland.

Because GDP is the annual amount of value added in the Polish economy. This is what it spits out each and every year. If you like, this is Poland’s income each year.

The Apple valuation though is the total amount that Apple is worth. In fact, it’s the value today of all of the income that Apple is expected to produce from now until the end of time. It is the capital value of Apple. Whereas the value assigned to Poland is just this year’s income for Poland.

Think of it this way. I’ve a bank account that pays me $5 a year. You have $5. Do these two things have the same value?

BYW, if we do this calculation properly then we find that Apple is worth about the same as Luxembourg. Still impressive, for a company to be of about the same value as a country. But it’s a pretty small country….

 



Posted: 29th, February 2012 | In: Money Comments (16) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink