What is market capitalization (market cap)?

Market Capitalization (Market Cap) is the most recent market value of a company’s outstanding shares. Market Cap is equal to the current share price multiplied by the number of shares outstanding. The investing community often uses the market capitalization value to rank companies

What does a company's market cap tell you?

A company's market cap can tell you how much the larger stock market has determined that company is worth. The investing community uses market cap to get an idea of a company's size. Market cap can also give you an idea of how stable or risky a company is.

How do you calculate market cap?

(in mil. US$) Market cap is given by the formula , where MC is the market capitalization, N is the number of common shares outstanding, and P is the market price per common share. For example, if a company has 4 million common shares outstanding and the closing price per share is $20, its market capitalization is then $80 million.

Why is market-cap important?

Market-cap is an important concept because it allows investors to understand the size of a company and how much its worth on the market.