Originally Posted by SolipsismX
Can you explain how you came to those values?
The market capitalization is simply (Price per Share * # shares outstanding). Market caps for AAPL, XOM, MSFT, WMT, and GOOG are: 461.4B, 406.6B, 257.0B, 212.7B, and 198.4B respectively. Thus all the articles that state Apple is the most valuable company are basing their "analyses" on market capitalization. Where this falls short is that it misses the entire debt portion of a company's capital structure. As a rule debt has absolute priority over equity in a bankruptcy, and interest payments have priority over any cash flows given to equity holders.
If a company has 100B in debt outstanding, and it *also* has a market capitalization of $100B, then the market is saying this company has an equity "cushion" of $100B beyond the $100B in debt outstanding. Thus the implied value of the company is $200. If a company was only worth it's market cap (as this article seems to imply), then said company should have a stock price of $0 because all its value is owed contractually to bondholders. Note: that the above analysis assumes the company doesn't have significant excess cash on hand beyond what's required to run the business.
Enterprise value is calculated as Market Cap + Market Value of Debt Oustanding - Excess Cash. EV gets to the heart of what the operating assets of a company are being valued at. It's also how most M&A transactions get valued at, as you'll often read: "the deal was valued at 8x trailing EBITDA" where value is not market cap, but EV.
Onto the calculations:
AAPL: Market cap ($461.4) + debt ($0) - excess cash ($97B) = 363.8B EV
XOM: 406.6B + 16.8B - 46.3B = 377B EV
and so forth. MSFT has an EV of 211.5B and GOOG has an EV of 159.2B
As an aside, the reason you subtract out excess cash (of which Apple has some 97B) is because this can be considered a direct offset of debt (as the cash can be immediately used to pay down debt). Often times you'll hear EV being calculated as Market Cap + Net Debt (debt, net of cash) which is the same analysis as above. Hope this helps.