Valuation (finance)

Valuation is the process of figuring out the worth of something. In finance, it's often used to describe the worth of a company or stock. You do this by looking at the company's financial information, like how much money it has coming in and how much money it spends. Companies will call in experts for help to figure out how much the company would be worth to someone who wanted to buy it. Some people say the stock market is like a giant auction, where people are bidding to see who will pay the most for different stocks. The price of the stock will go up or down based on how much people think it is worth—that's why valuation is so important.