# How is a billionaire's net worth calculated?

1. Jan 2, 2007

### ShawnD

When you see a number saying something like Bill Gates is worth 40 billion, where does that number even come from? Even more confusing is when it's included that the majority of that is in stock. Alright so let's do some math here. Microsoft's stock price on Dec 29, 2006 is $29.86 and share volume is 41.76 million. Multiply those together and Microsoft is worth 1247 million, or$1,247,000,000 (1.25 billion). Wouldn't Bill need to own 100% of Microsoft's stock about 30 times over before being worth 40 billion?

2. Jan 2, 2007

### arildno

The total stock price is not, I believe, equal to all the ASSETS of Microsoft.
So, you should look at how many "valuables" Bill Gates controls, through his ownership of Microsoft.

3. Jan 2, 2007

### Jimmy Snyder

That would give you the value of the shares that were traded, but not the value of the shares owned. For that you want a figure known as the "shares out". For Microsoft, this is 9830 million shares. The product of this with the price is called the market capitalization. For Microsoft this is $300 billion (that's million with a B). Bill owns roughly 1 billion shares and so has$30 billion in Microsoft stock.

Anyone that holds 5% or more of a publicly traded company, or is an executive or board member, is required to report it to the SEC. As a result, we know that Bill holds insignificant amounts of ICOS Corp, and Berhshire Hathaway. Insignificant compared to $30 billion, not insignificant to me. I do not know where the rest of the$40 billion comes from.

4. Jan 2, 2007

### arildno

Norway subsidizes him.
We subsidize everything, from agriculture to oil companies..

5. Jan 2, 2007

### Staff: Mentor

I suspect if you add all those diversified holdings and his charitable foundation up, that'll get you up to the \$40bil. Not sure where to find that info, though.

Last edited: Jan 2, 2007
6. Jan 2, 2007

### hypatia

Plus all the buildings/land he owns, art work, all the office equipment, even his own home.

7. Jan 2, 2007

### ShawnD

Awesome this explains everything. Thanks guys! I didn't know there were other non-trade shares.

8. Jan 4, 2007

### twisting_edge

It's a not a property of the shares. It's just a measure of how much was bought and sold on that particular day. The shares Gates owns and the share volume (also more clearly known as the "trading volume", although it really ought to be called the "traded volume") are probably all the same class of shares for the most part.

If Gates decided to dump 100 million of his shares one day, the trading volume that day would be whatever was traded earlier in the day, plus 100 million. After that, trading would cease, of course, since the price would fall through the floor and nobody'd touch the stock until they figured out why he did such a boneheaded thing.

How can you tell right off it would be a bonehead thing for him to do? Because if a 40 million share trading volume is typical, then you'd expect there to be people willing to buy about that many shares at the current price on any given day (as well as about that many willing to sell). If you try to sell double that amount in a single day, you're not going to find enough buyers at anything like the current price.